A green car loan is any vehicle finance option available for cars that are better for the environment, generally meaning those with lower than average emissions. These include hybrid and electric vehicles, as well as normal cars with noticeably better fuel efficiency.
WATCH: How to save money on an eco-friendly vehicle
How does a green car loan work?
A green car loan effectively works the same as any other car loan. If you apply for a loan for a vehicle that meets the lender's definition of environmentally friendly, you will generally receive an interest rate discount of 0.5%-1% and may be exempt from certain fees.
In addition to a discounted rate, some lenders will also offset your carbon emissions for the term of the loan to help reduce your carbon footprint.
You will generally apply for a green car loan like you would any other car loan, and simply select the green car loan option during the application process.
How do I know which cars can be used on a green car loan?
While the list of eligible vehicles will vary by lender, a car may be eligible if it meets one or more of the following requirements:
It is a new vehicle
It is a hybrid or electric vehicle
It is more fuel efficient than the average car in its class
Some of the popular car models that may be eligible include:
Tom Stelzer is a writer for Finder specialising in personal finance, including personal loans and car loans, as well as small business and business loans. He has previously worked as a freelance writer covering entertainment, culture and football. He has a Master of Media Arts and Production and Bachelor of Communications in Journalism from the University of Technology Sydney.
If you’re in the market for a new car, the Great Southern Bank Fixed Rate Car Loan may be able to give you the funds you need. With the security of a fixed rate and flexible repayments, this loan might be what you need to own your new set of wheels.
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