How to buy a green (eco-friendly) vehicle

With increasing fuel prices, energy insecurity and climate concerns due to carbon emissions, there has never been a better time to drive an eco-friendly car.

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A significant level of carbon dioxide emissions in Australia is attributed to personal car use. Although public and self-propelled transport are generally less polluting than personal cars, it is sometimes necessary to use a car.

One way of reducing the amount of emissions produced from driving is to own an eco-friendly (green) car. Green cars offer an alternative to traditional petrol-consuming vehicles that rely solely on fossil fuels to run. Green cars produce low or no emissions, helping to reduce greenhouse gas emissions. There is an ever expanding range of green cars, making them an increasingly viable option. However, green cars do have limitations such as a higher price and restricted range.

What is a green vehicle?

While there is no standardised definition of a green car, it is generally considered to be one that has low carbon emissions. All cars sold in Australia must meet minimum emission requirements, but green cars exceed the minimum threshold or completely cut exhaust emissions. To do this, green cars either use electric or hybrid drive systems.

1. Hybrid

Hybrid vehicles use both petrol and electric engines to power the car. Unlike electric cars, they do not need to be plugged in to recharge the battery as the petrol engine charges the batteries. Some also utilise deceleration when braking to charge the electric engine.

They run on either the petrol or electric engine, and the onboard computer in the car switches between the two engines to maximise efficiency. For example, when the car is idle and during acceleration, the electric engine will switch on, but while cruising, the petrol engine will take over.

2. Electric

Electric cars run solely on a rechargeable battery. They are charged from charging points either at home or in public places. Some electric cars can also utilise the deceleration process to charge the battery.

Electric cars have no fuel tank or exhaust pipe and never need an oil change. However, they are restricted by the need to recharge, which can only be done in certain locations.

Need a loan to buy an eco-friendly car? Compare your repayments on the below loans

Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Service Fee Monthly Repayment
Plenti Car Loan
From 4.89% (fixed)
3 to 7 years
from $249 to $799
You'll receive a fixed rate from 4.89% p.a.
Borrow up to $100,000 with a Plenti Car Loan and benefit from no early repayment or exit fees. - New and Dealer Used Car Loan
From 4.67% (fixed)
3 to 5 years
You'll receive a fixed rate from 4.67% p.a. based on your risk profile
Finance a new car and benefit from features such as fast approval, no ongoing fees and an optional balloon payment. Settle the loan before 30 November 2021 and enter the draw to win a $1,000 fuel gift voucher. T&Cs apply.
Credit Concierge Car Loan
From 3.35% (fixed)
1 to 7 years
You'll receive a fixed rate of 3.35% p.a. with a comparison rate of 4.41% p.a.
Get access to over 20 providers to fund a new or used car.
RACV New Car Loans
From 4.99% (fixed)
1 to 7 years
You'll receive a fixed rate from 4.99% p.a.
A larger loan of $5,000 or more to help you buy a new or used car. 5-hour pre approval available and no ongoing fees.
Wisr Secured Car Loan
From 4.74% (fixed)
3 to 7 years
$195 for refinance and dealer sale ($245 for private sale)
You'll receive a personalised interest rate from 4.74% p.a. to 16.01% p.a. based on your risk profile
A flexible car loan from $5,000 - $63,000 with personalised rates and rewards for strong credit customers.

⭐Special Offer: Wisr's standard establishment fee $605 will be reduced to $195 for applications submitted through Finder. T&Cs apply.
OurMoneyMarket Car Loan
From 5.35% (fixed)
1 to 7 years
You'll receive a fixed interest rate from 5.35% p.a. to 14.99% p.a. based on your risk profile.
Borrow between $2,001 and $75,000 to finance a new or used car up to 10 years.
Stratton Finance New Car Loan
From 3.85% (fixed)
3 to 7 years
You'll receive a fixed rate from 3.85% p.a. depending on the lender you are approved with
Apply for up to $250,000 and use cash or trade in a vehicle to use as a deposit. Optional balloon payment available.
IMB New Car Loan
4.99% (fixed)
1 to 7 years
$275.12 ($250 Application fee + $25.12 PPSR fee)
You'll receive a fixed rate of 4.99% p.a.
A low minimum borrowing amount of $2,000 that you can use to purchase a new car or one that's up to two years old.
NRMA New Car Loan
From 4.99% (fixed)
1 to 7 years
You'll receive a fixed rate from 4.99% p.a.
Purchase a new or used car up to 3 years old and benefit from a fixed rate and no monthly fees. Pre-approval available within 5 business hours.
NAB Personal Loan Unsecured Fixed
From 6.99% (fixed)
1 to 7 years
You'll receive a fixed rate between 6.99% p.a. and 18.99% p.a. ( 7.91% p.a. to 19.83% p.a. comparison rate) based on your risk profile
Borrow from $5,000 to $55,000, with 1 to 7 year loan terms available. This loan comes with no fees for extra repayments and no early exit fees.
Heritage Bank Car Loan
4.89% (fixed)
1 to 7 years
You'll receive a fixed rate from 4.89% p.a.
Finance a new or used car up to 5 years old. Large maximum borrowing amount up to $100,000 and terms up to 7 years.
Symple Loans Personal Loan
From 5.75% (variable)
1 to 7 years
from 0% to 5% of the loan amount
You'll receive a personalised interest rate from 5.75% p.a. to 25.99% p.a. based on your risk profile
Borrow up to $50,000 to pay for what you need.
Driva Car Loan
From 2.85% (fixed)
1 to 7 years
$295 (Varies by lender, starting from $295)
You'll receive a fixed rate from 2.85% p.a.
Borrow up to $250,000 with loan terms from 1 to 7 years. Get access to a range of lenders.

Compare up to 4 providers

What are the benefits of a green vehicle?

Green vehicles have a range of benefits for both the owner and the community. Here are some reasons to drive a green car:

  • Fewer emissions. Green cars have low exhaust emissions reducing the amount of carbon released into the atmosphere.
  • No or low petrol costs. While hybrids do require petrol, they consume a lot less than regular cars. Hybrids can travel approximately 100 kilometres on 3-5 litres of petrol. This is roughly half of what is used by a comparable petrol car to travel the same distance. Electric cars don’t use petrol but do require electricity to recharge.
  • Cleaner cities. Car emissions are a major contributor to poor air quality in cities. By driving a low emission vehicle, you won’t be increasing the amount of smog.
  • Less noise. Electric engines are quieter than petrol engines. This reduces the amount of road noise in cities.
  • Reduced stamp duty. All Australian states and territories have reduced stamp duty for low emission cars, which helps offset the higher purchase price.
  • Increasing consumer demand. By generating demand for electric vehicles, you are helping improve the technology and bring down the price. Doing so makes them more attractive to others, creating a cycle of benefits.

How do I know a vehicle is green?

All cars sold in Australia must meet emissions testing requirements. This information should be displayed somewhere on new vehicles (generally on the windscreen).

If you are buying a fully electric car, then your vehicle won’t produce any emissions. The situation with hybrids may be slightly murkier as the manufacturer will report fuel economy that you may never be able to achieve during real-life conditions.

It is important to research perspective cars before you commit to buying one. There are independent bodies that test emissions and fuel economy on most new vehicles and might give a less biased figure.

One thing to consider with an electric car is how the car will be charged. Although electric cars have no exhaust emissions, if coal powered electricity is used to charge the car, then it is still responsible for carbon emissions. Electric cars can only be truly emission-free if a renewable source of electricity is used to charge the car.

WATCH: How to save money on an eco-friendly vehicle

What are some examples of eco-friendly vehicles in Australia?

Here are some common eco-friendly cars available in Australia:

  • Toyota Prius. An early hybrid and perhaps one of the more common green cars. They come as a medium sedan or hatch and are similar to a Toyota Corolla.
  • Nissan Leaf. A fully electric hatch with a small solar panel for internal accessories. It can do a partial recharge in 30 minutes from specific quick-charge points.
  • Tesla Model S. Tesla only makes electric cars. They aren’t cheap but are designed to perform like a sports car, not a golf cart.
  • BMWi3. A fully electric hatch for city drivers who appreciate German engineering.
  • Mitsubishi Outlander PHEV. This one is for the whole family. A hybrid SUV which reportedly gets 100km on just 1.9L of petrol.

Are there any drawbacks of green cars?

The two main drawbacks of green cars are the upfront cost and the limited range. Green cars are much more expensive than a comparable petrol vehicle. Even considering the savings on petrol, oil, maintenance and stamp duty, it would take a few years to offset the upfront expense. However, this is assuming petrol prices do not drastically increase.

Range refers to how far the vehicle can travel before needing to refuel. When compared to petrol vehicles, electric cars have a very restricted range. They are also limited to areas which have recharge stations, such as your own home or a public recharge station. This makes electric cars problematic for those who need to travel longer distances or stay away from home. However, hybrids could be a suitable option in this situation.

Green car technology is still developing, and while both these issues are certainly legitimate, you should expect rapid improvements as they become more common.

How much do green cars cost?

Green cars are more expensive than petrol vehicles. An electric hatch may sell for $30,000, whereas a comparable petrol model might be $15,000. Medium size sedan hybrids go for around $40,000, whereas a petrol equivalent could be as low as $20,000. For new cars, stamp duty will be less for a green car than a regular petrol vehicle.

Tips for eco-friendly driving

If nothing else, you can substantially reduce your vehicle's emissions just by changing your behaviour. Here are some green driving tips:

  • Accelerate slowly and smoothly. Engines use the most fuel when operating under strenuous conditions. In terms of driving, this is when you are accelerating. Try to limit rapid or erratic acceleration.
  • Anticipate traffic conditions. The most efficient way to drive is to maintain a fairly constant speed. Rapid slowing and accelerating wastes fuel. Anticipate the conditions ahead to minimise the amount you need to slow down or speed up.
  • Remove unnecessary equipment. Extra weight and accessories decrease the efficiency of your vehicle. Roof racks cause drag and tools add extra weight. If you don’t regularly use or need them, get rid of them.
  • Maintain your vehicle. Basic maintenance such as checking tyre air levels and engine oil is an easy way to keep your car running efficiently. Performing routine services will also help identify problems to keep your vehicle operating optimally.

Green cars are becoming increasingly viable for those living in cities. If you are concerned about your vehicle's carbon emissions and its effect on the environment, then you should consider an eco-friendly alternative. However, be aware of the additional upfront cost and limitations before you commit.
Picture: Shutterstock

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Logo for IMB New Car Loan
IMB New Car Loan

You'll receive a fixed rate of 4.99% p.a.
A low minimum borrowing amount of $2,000 that you can use to purchase a new car or one up to two years old.

Logo for Beyond Bank Low Rate Car Loan "Special Offer"
Beyond Bank Low Rate Car Loan "Special Offer"

You'll receive a fixed rate of 4.69% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.

Logo for RACV New Car Loans
RACV New Car Loans

You'll receive a fixed rate from 4.99% p.a.
A larger loan of $5,000 or more to help you buy a new or used car. 5-hour pre approval available and no ongoing fees.

Logo for NRMA New Car Loan
NRMA New Car Loan

You'll receive a fixed rate of 4.99% p.a.
Purchase a new or used car up to 2 years old and benefit from a fixed rate and no monthly fees. Pre-approval available within 5 business hours.

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