Startling claims: Reseach finds Australian EV buyers are saving almost $2000 on car-loan interest

Australians financing an electric car are securing significantly lower interest rates than petrol and diesel car buyers, with new data suggesting the difference can save an EV buyer almost $2000 in interest over five years.

Analysis of more than 6000 vehicle loans by Australian finance broker Savvy found the average interest rate secured for a new EV during the 2025-26 financial year was 8.49 per cent, compared with 9.80 per cent for a new internal-combustion vehicle.

And unlike a broader comparison of EV and ICE loans, where the average amounts borrowed vary significantly, new-car buyers were financing almost identical amounts.

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The average new EV loan was $51,362, just $55 less than the $51,417 average for a new petrol or diesel vehicle.

Based on a five-year loan, Savvy calculates the EV buyer would therefore pay $11,849 in interest compared with $13,827 for the ICE buyer – a saving of $1978.

Average monthly repayments were also $33 lower at $1054 for the EV compared with $1087 for the petrol or diesel vehicle.

Savvy says one reason for the difference is the growing availability of so-called green car loans, which offer discounted rates for eligible lower-emissions vehicles.

It says discounts can range from around 0.5 to 1.5 percentage points compared with conventional vehicle finance, although not all lenders offer them.

That fits closely with the 1.31 percentage-point difference Savvy found between the average interest rates for new EV and ICE loans.

The difference becomes much larger when Savvy’s entire 2025-26 loan book – including used vehicles – is considered.

Across all EVs, customers borrowed an average $48,902 compared with just $37,346 for ICE vehicles, meaning the average EV borrower took out an additional $11,556 in finance.

Yet the average EV interest rate was 9.04 per cent compared with 12.72 per cent for an ICE vehicle.

Savvy calculates that over five years the EV borrower would pay $12,063 in interest compared with $13,318 for the ICE borrower – $1255 less despite borrowing more than $11,500 extra.

However, the figures don’t necessarily mean simply choosing an EV will automatically deliver such a dramatic reduction in your finance rate.

The average ICE loan includes used vehicles that can be 15 years old or more, while Australia’s comparatively young EV fleet means electric-car borrowers are more likely to be financing newer and more expensive vehicles.

Borrower demographics also appear to play a part.

Savvy data collected between March and June 2026 found 75 per cent of its EV borrowers were property owners compared with 53 per cent of petrol and diesel borrowers.

Factors including income, employment, credit history and home ownership can all affect the interest rate offered by a lender.

Nevertheless, Savvy managing director Bill Tsouvalas said the availability of green loans was currently giving some EV buyers an advantage.

“EV buyers are benefitting from some very competitive rates right now, but there’s no guarantee that advantage will last,” he said.

“These more competitive rates are allowing families to get more car for less. On a $50,000 loan, a difference of 3.68% p.a. means an extra $86 per month back in a family’s pockets. That’s also without accounting for the lower running costs that many EVs are providing.

“Green loan discounts have helped make EV finance more attractive, but these incentives aren’t set in stone. As electric cars become more mainstream and demand continues to grow, lenders may no longer feel the need to offer the same incentives to attract borrowers.

“That makes it even more important for buyers to be proactive about how they finance their car. Comparing lenders and putting yourself in the strongest possible borrowing position can help when it comes to securing a competitive rate.”

There is another significant financial incentive available to some EV buyers through novated leasing.

Eligible battery-electric vehicles currently qualify for the Federal Government’s Electric Car Discount, which exempts them from fringe benefits tax (FBT) when provided through eligible salary-packaging arrangements.

The full existing exemption continues until March 31, 2027, after which the scheme begins to change.

From April 1, 2027 until April 1, 2029, the full FBT discount will continue for EVs priced at $75,000 or less, before further changes are introduced as the Federal Government progressively reshapes the scheme.

Savvy’s figures are based on loans arranged through the finance broker rather than the entire Australian vehicle-finance market, so they should not be interpreted as showing that every EV buyer will receive a cheaper loan than an equivalent petrol or diesel buyer.