Can You Get an Electric Car Loan?

Can You Get an Electric Car Loan?

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A KPMG survey of 800 executives in 38 countries working for car manufacturers, suppliers, dealers and finance providers revealed that 90% of bosses believe that electric cars will dominate the market in 2015.

Electric cars are extremely popular in Europe, especially in Norway, where nearly 1 in 3 new cars registered is an EV, and the government have a program to phase out fossil-fueled vehicles by 2025.

So why is Australia falling behind?

It's partly due to the government legislation passed in 1989 to protect the now non-existent Australian car manufacturing industry which prohibits the direct import of certain makes and models of cars.

This will all change in 2018 with the introduction of new laws allowing personal imports and reductions of customs tariffs.

If you're sick of changing the oil, filling up with petrol, and driving a car that's expensive to maintain, with hundreds of parts that can break - an electric car may be just what you are looking for.

You can even get a car loan to buy a new or second-hand electric car, and use the money you'll save on fuel and repairs towards loan payments.

Why Buy An Electric Car?

An electric car motor has only 20 moving parts, compared to more than 2,000 parts that make up an internal combustion engine (ICE) of a regular car.

Fill up for free at the increasing free fast-charge points around Australia

The electricity costs for an electric car are just a fraction of what you'll pay for fuel to travel the same distance.

Plus, unlike a petrol car, regularly released software updates mean that your electric car will only get better over time as the technology improves.

Right now electric cars are still very expensive, but it's been predicted that by 2020 a brand new electric car will cost you just $30, 000. That's under the current median price of $33, 000 you'll pay for a combustion engine car right now.

Where can you 'fill-up' your EV?

As electric cars have become more popular, hotels, caravan parks, shopping centres and cafes have begun to offer free charging as an additional reason to spend time there. There's even an electric car charging point at the Positive Group head office in Adelaide.

In Western Australia, seven councils in the South West are building Australia's first 'electric highway'. The RAC is funding 50-kilowatt charging stations from Perth to Augusta, including the popular tourist destination Margaret River, where you can recharge in about 30 minutes.

Looking after your electric car - save $ at the mechanic

To keep your electric car in top condition, all you need to do is check the brakes once a year, and rotate the tyres every 20,000km.

With few moving parts, there's no coolant, oil changes, spark plugs, fan belt or transmission failure to be concerned about.

Your total annual electric car maintenance will cost you no more than a third of what it costs to maintain a petrol car.

To spell it out in detail, here's a side-by-side comparison of the annual costs of an electric and an internal combustion engine car:

Cost Comparison with Fossil Fuel Cars

To truly get a feel for the costs of running an electric car instead of a fossil fuel car, let's take a ride with Sally over 12 months and compare how much she'll spend whether she's driving an EV or a petrol car.

Case Study:

Sally's transport needs

In this example, we'll assume that Sally drives 100km each day, for 5 days each week to get to and from work.

On weekends she doesn't drive, taking a bicycle or carpooling with friends and family to events and brunch.

Sally drives for 48 weeks of the year, as she usually goes overseas for her 4 weeks annual leave.

Here's what her annual vehicle costs will be (for a car she owns 100% already) if she's running an internal combustion car:

Running Costs of an Internal Combustion Engine (ICE) Car

Sally doesn't need a big car for her commute, so we'll set her fuel economy at a conservative 10L per 100km.

Sally shops around for the lowest fuel price each week, so we'll set the average fuel price of $1.20/L. This is low if you've been buying fuel lately!

Using this info we can calculate how much Sally spends on fuel annually:

Sally drives 500km per week, so this means she'll use about 50L of fuel each week. That means she spends $60 per week on fuel or $2880 annually to drive 24, 000 km each year.

Maintenance Costs for an Internal Combustion Engine (ICE) Car

Unfortunately, fuel isn't the only cost Sally has to pay to keep her ICE car running. Every 7, 500 km, the car needs an oil change. Her mechanic is generous and only charges her $150 for an oil change.

Sally's ICE car also needs a major service every 100, 000km, and other repairs in between. We'll allow $1500 for each major service and $1200 for other mechanical repairs throughout the year.

Internal Combustion Car Engine

Photo: Internal Combustion Car Engine via Flickr, Andrew Taylor

Altogether, Sally's annual servicing costs are:

  • $480 for oil changes
  • $625.05 annually towards major services
  • $1200 for other mechanical repairs

This brings Sally's total annual service costs to $2305.05. Remember, she's very lucky with her mechanic - most mechanics will charge a lot more for an oil change or timing belt!

If you want confidence that your mechanic isn't ripping you off, check out our guide to your local Accredited Mechanics and find out what you should expect and how you can get a guaranteed fair service.

Total Annual Costs of a Petrol Car

Using these very conservative assumptions, Sally's total annual running costs for her ICE car are $5185.05 annually.

NB: This assumes she owns the car 100% and isn't making car loan payments.

What if Sally drives an Electric Car instead?

If Sally has an electric car, it's most likely going to be a Nissan Leaf.

There's plenty of models currently available in Australia, and she could even purchase one second-hand.

The Nissan Leaf has a range of about 130km before needing a battery recharge.

'Fuel' Costs for a Nissan Leaf

With a Nissan Leaf, Sally's fuel costs at the pump are zero. Instead of pulling into a petrol station once a week, she'll plug her car in to recharge overnight.

At the 2016 Australian Energy Week, AGL announced a scheme they will be implementing to charge your electric car as much as you want in a 24 hour period for just $1 per day.

If Sally takes advantage of this scheme, her fuel costs will be $240 to drive 24, 000km annually.

Nissan Leaf at Charge Station

Photo: Nissan Leaf at Charge Station via Flickr - Yusuke Kawasaki

Until this comes into effect, we'll calculate Sally's running costs based on an average price for electricity of 25c per kWh.

She'll use about 18kWh to travel 100km, so it'll cost Sally $4.50 to travel 100km each day in her Nissan Leaf.

This brings her annual running costs to $1080 so far.

Maintenance costs for Sally's Nissan Leaf

A Nissan Leaf requires very little maintenance because it has very few moving parts.

The main thing Sally needs to think about is the life expectancy of the Battery.

The Nissan Leaf battery will generally last for 7-10 years if it's recharged daily, before its capacity to hold charge reduces, reducing the range the vehicle can travel between recharging.

To replace the Nissan Leaf battery with a brand new battery will cost $7, 200 AU, plus installation.

If Sally needs to replace the battery needs to be replaced at 7 years, she'll need to budget $1028.57 per year towards the battery replacement.

Sally Chooses a Nissan Leaf

By choosing to drive a Nissan Leaf rather than a small ICE car, Sally will save $1, 800 on fuel costs alone.

Looking at the cost of repairs and maintenance, driving a Nissan Leaf Sally will save another $1276.48 each year compared to driving an ICE car.

With total annual savings of at least $3, 076.48 driving a Nissan Leaf, Sally decides that it's definitely worth the extra initial cost to purchase an electric car.

She's also glad to be reducing her impact on the environment as more and more electricity in Australia is produced from renewable energy sources like wind or water rather than burning of coal.

What's it like to drive a Nissan Leaf?

Check out these reviews by Nissan Leaf owners, and if you're after something upmarket, here's a review from a Tesla driver (he'd originally planned to buy a Ferrari).

Driving perks of an electric car:

  • A 360-degree reverse camera, mobile integration, navigation (which can locate public charging points).
  • Linear torque - when you accelerate you get instant power. With no gears, acceleration is perfectly smooth, and there’s no lag between pressing the accelerator and the car moving forwards.
    The Nissan Leaf reaches 160 kmph faster than any petrol sportscar.
  • Silence. No engine noise means you can chat, listen to music and just enjoy the drive.
  • High safety ratings: With no engine, the entire front of the car becomes a crumple zone.

Nissan Leaf DrivingPhoto: Nissan Leaf driving via Flickr Pro Karlis Dambrans

Environmental benefits:

  • No exhaust emissions. This is a really huge factor if you’re concerned about our earth’s health moving forward.
  • No gas, no oil, no mess! Maintenance costs are negligible.
  • No noise pollution.

Why the high $$$ for a Nissan Leaf?

The most expensive part of an electric car is the battery, which means that so far electric car prices have remained prohibitively high for most Australians, but this is on track to change in the next 4 years.

This graph shows the dramatic drop in battery prices. Once this cost reaches $150 per kilowatt-hour, the purchase of an electric car will be cost-competitive with petrol vehicles.

Dramatic drop in battery prices graph

What's it like to own an electric car in Aus?

Here's what one of our Sydney clients had to say about getting an electric car loan for a Nissan Leaf:

What lead you to decide to purchase an EV?

As a student, I'd driven old 'bombs' for 8 years, a circumstance fraught with breakdowns, high repair costs and some stress.

With a long list of repairs needing to be done on the last one, I decided to buy an electric car because:

  • The amount I spend annually on petrol alone was enough to cover the interest on a car loan for the Nissan Leaf.
  • After driving old cars, the term 'range anxiety' didn't worry me at all - all I had to do was find a charge point every 130km - and there would be no more worry about breaking down and ongoing costs of expensive repairs.
What's the car like to drive? Is it slower with luggage and passengers?

The car is fantastic, it's like living in the future. The fuel savings are definitely significant.

Instant torque at low revs makes the car feels very nippy. I haven't noticed any depletion in performance when the car is full.

How does an EV accommodate a family lifestyle?

I have two kids under 5 and two dogs. The car fits our family very efficiently.

How much do you drive?

I do about 40,000 km/year. Most of that is commuting to and from uni - a round trip of about 90km.

In that sense my driving needs almost perfectly fit the Leaf; I do enough driving to get the benefits of reduced running costs, but my daily commute is well within the range of the car.

Have you had any issues with the Leaf's driving range or finding places to charge when you're away from home?

There are two charging points between my house and the university where I work.

One of them is at a shopping centre, so I'll often stop in there on my way home from uni and do the grocery shopping while the car tops up.

Charging is free at all the charge stations near me, so I get some extra savings on electricity.

Can I buy a second-hand electric car?

You certainly can!

There’s already a range of EV’s available on the popular Car Sales website, and with more models due to reach Australia in the next few years, the options will only increase. You can even get car finance to buy an electric car.

Like what you've read and want to find out more? Speak to a car finance broker today about your options by calling 1300 722 210.

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