Choosing a hybrid or electric car is a big decision, and the finance can feel like another puzzle. Do lenders treat these cars differently? Do you get a better rate? What happens with tax?
This guide answers those questions in plain terms, based on what we see across our lender panel.
*Comparison rate [ADD]% p.a., based on [ADD loan amount] over [ADD term]. [ADD the standard comparison rate warning.] Rate as at [ADD date], subject to lender approval and criteria.
Lenders group these cars separately, and the group affects your rate.
When you apply, it helps to know which of these your car is, because it determines which lenders and rates are available to you.
A car loan rate depends on the lender, the type and age of the car, the amount you borrow, the term and your credit profile. On top of that, many lenders price EVs and PHEVs lower than comparable petrol and diesel cars.
Through our panel, that gap is about 1%, with EV and PHEV rates starting from 6.69% p.a.* Your actual rate will depend on your situation.
Here's what a 1% difference looks like. This is an illustration using example rates only, not an offer. Take a $45,000 loan over five years:
That's about $22 a month, or around $1,280 over the loan. It's a useful saving, but the rate isn't the whole picture. Compare the comparison rate, which includes most fees and charges. We explain the difference in Interest Rate vs. Comparison Rate.
Many lenders will finance new and used hybrids and electric cars, but conditions can differ from a petrol car. Common things to check:
A hybrid or electric car often costs more upfront than the petrol equivalent, which is why some buyers choose a longer term or a balloon to hold the repayment down.
Be careful with both. A balloon is a lump sum due at the end, and it needs to be realistic compared with what the car will be worth. Read How Balloon Payments Work and When to Use Them and Residual Risk in Asset Finance before you decide.
It also pays to match your term to the battery warranty. Battery warranties vary by manufacturer and model, so check the figure for the car you're considering.
The tax rules for electrified cars have changed recently, so check them before you buy.
According to the ATO, from 1 April 2025, plug-in hybrids no longer qualify for the electric car fringe benefits tax (FBT) exemption. A transitional rule applies if the private use was already exempt before that date and a binding commitment made before it still covers that use. Standard hybrids weren't part of the exemption. Battery electric vehicles may still qualify, subject to the conditions, so ask your accountant how it applies to your situation.
If you're buying for a business, a hybrid or electric car can be financed like any other work vehicle. A chattel mortgage is a common choice, and our guide to chattel mortgages and leases compares the options.
A car's reliability and running costs affect what it really costs you, and the picture differs between petrol, hybrid and electric. In the latest Consumer Reports survey, conventional hybrids had about 15% fewer problems than petrol cars, while plug-in hybrids and electric cars had more. Our guide to the most reliable car brands goes through the detail, and The Hidden Costs of Fuel Economy looks at running costs.
A single bank can only offer you its own products. We compare a panel of lenders, which matters here because lenders price EVs, PHEVs and hybrids differently. We can show you which ones suit your car and your profile.
Are interest rates lower for electric and plug-in hybrid cars? Through our lender panel, EV and PHEV rates are typically about 1% lower than for comparable petrol and diesel cars, starting from 6.69% p.a.* Your rate depends on your profile and the vehicle.
Do conventional hybrids get a lower rate? [CONFIRM AND ADD: the answer for conventional hybrids on your panel.]
Can I get finance for a used hybrid or electric car? Often, yes. Lenders have conditions on age and sometimes on the car itself, so ask your broker before you commit to a purchase.
Do I need a deposit? Not always. Some lenders offer finance without a deposit, depending on your income and credit history. A deposit lowers your loan amount and your total interest.
Is a plug-in hybrid still exempt from FBT? Generally no, since 1 April 2025, with a transitional rule for arrangements that were in place before that date. Check with your accountant.
How does a balloon payment work on a hybrid or electric car? A balloon lowers your repayments, but leaves a lump sum due at the end of the loan. You can pay it, refinance it or sell the car. Make sure it's realistic for the car's likely value.
Our team can compare lenders, check the rate that applies to your car and get you pre-approved before you shop. See our vehicle finance options or apply online.
Sources: ATO, What's new in FBT; Consumer Reports, 2026 Automotive Brand Report Card.
This article is general information only and does not take into account your objectives, financial situation or needs. It is not tax advice. Rates are examples or as stated and may change. Lending criteria vary between lenders and approval is subject to lender criteria.
