Time to read : 2 Minutes
Bank Australia has announced it will stop providing car loans for new diesel and petrol cars from 2025.
"By ceasing car loans for new fossil fuel vehicles, we are sending a signal to the Australian market about the rapid acceleration in the transition from internal combustion to electric vehicles we expect to see in the next few years."
– Bank Australia's Chief Impact Officer Sasha Corville.
What you need to know
Bank Australia's move comes as Australia edges closer towards a potential ban of non-electric cars.
The ACT has already announced that it will ban the sale of fossil fuel vehicles by 2035.
The territory also have an interest-free loan scheme of up to $15,000 for Canberrans who are keen to go electric.
The ACT's move has increased the pressure on the federal government
But Electric Vehicles (EVs) still aren't cheap. The NRMA estimates the entry cost for a new hybrid model is about $26,500.
Bank Australia is still offering loans for second hand fossil fuel vehicles.
“We are deeply aware that we need to support people not yet able to afford an electric vehicle while the market grows,” says the bank's Sasha Corville.
Research from BloombergNEF suggests we'll reach price parity between petrol or diesel cars and EVs by around 2027.
The bottom line
Fossil fuel cars are slowly being phased out over the next 10-15 years.
Bank Australia are one of the first movers when it comes to greener car loans but, with car manufacturers increasingly moving to producing EVs, expect other lenders to follow suit.
Be aware: check the interest rate on any car loan before you commit so that you don't end up with a more expensive loan that will take you longer to pay off.
Financial Disclaimer:
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions.
