Do you know what a green loan is? Have you heard of this term before? Want to know more about it? In a nutshell, green loans have something to do with the environment and it’s somehow connected to the purchase of electric vehicles. To help you understand where this article is going, let’s begin with the fact that electric vehicle purchases in Australia of late are soaring at a staggering rate.
According to sales data from the Federal Chamber of Automotive Industries (FCAI), almost 50,000 electric vehicles were sold in the first 7 months of 2023. That’s a significant increase compared to the previous year (2022 saw a total of 33,410 electric vehicles purchased). These sales are also driving up demand for sustainable vehicle finance as more Australians seek economic solutions that are also environmentally responsible – known as a ‘green loan’.
What is a Green Loan?
Green loans offer an eco-friendly solution for environmentally conscious Australians. They are intended to fund a range of projects that encourage ecological sustainability. Lenders usually offer a green loan to electric vehicle buyers to show their support for those making “greener” choices. Borrowers who qualify for sustainable vehicle finance not only support the planet but also enjoy a range of cost savings.
Why Consider a Green Loan for Electric Vehicle Finance?
The benefits of green loans cannot be overstated. By opting for a green loan, you’ll save money, help the environment, and make a real contribution to sustainable initiatives.
- Saving Money: Eco-friendly car loans often include longer repayment terms, reduced interest rates, or a reduction in fees. Additionally, electric vehicle owners may be eligible for various government tax incentives and rebates. While these incentives vary by state and territory, they can include reduced or waived stamp duty and exemptions from Luxury Car taxes.
- Helping the Environment: Green loans are only available for projects or purchases that will have a positive impact on the environment. Electric vehicles are an obvious match for a green loan, as they significantly reduce your carbon footprint.
- Contributing to Sustainable Initiatives: The increasing popularity of green loans is helping to attract more environmentally conscious customers and investors. This has a positive ripple effect, contributing to more sustainable initiatives in the future.
How to Qualify for a Green Car Loan for an Electric Vehicle
To qualify for an eco-friendly, green car loan, you’ll need to prove your intended purchase is eligible, provide appropriate documentation, and have an acceptable credit score.
- Eligibility Criteria: First and foremost, you’ll need to prove that you’re going to use the borrowed funds for a purchase that aligns with the lender’s “green” criteria. In other words, the lender wants to ensure you won’t obtain a green loan and then use the money to buy a diesel-guzzling SUV.
- Documentation Required: You’ll still need to provide standard loan documentation, which typically includes various forms of ID and proof of income (although the specifics will vary between lenders).
- Importance of Credit Score: Never underestimate the importance of your credit score, as it can play a significant role in whether or not you’ll qualify for a green loan. Make sure any loan you’re applying for will be an asset to your credit score (not a disadvantage).
Muscle Money’s Approach to Eco-Friendly Car Loans
At Muscle Money, we’re proud to support the growing number of Aussies who are taking the next step and purchasing an electric or hybrid vehicle. Our technology-driven platform, combined with our experienced brokers’ insight into the Australian EV market, means that when you work with Muscle Money, you’ll gain access to a broad panel of lenders who specialise in offering green loans. We’ll be able to assist you in obtaining a loan that is good for the planet and your credit score.
If you’re considering an electric vehicle purchase, Muscle Money can help you get your finance sorted. The benefits of green loans are obvious: you’ll save money, get a great finance deal, and all while doing your bit to help the planet! To find out more about Muscle Money’s lender options for green loans, just fill in an online application or chat with one of our experienced brokers today.
Caleb Waye-Harris, Senior Manager of Asset Finance at Muscle Money, has almost 15 years of relevant experience in the finance industry. His extensive background includes project management, consumer and commercial lending and asset-based lending.
