How to Finance an Electric Vehicle in Australia

Thinking about making the switch to an electric vehicle? You're not alone. With rising petrol prices and increasing environmental awareness, more Australians than ever are choosing EVs. But with purchase prices typically ranging from $40,000 to $100,000+, most buyers need finance. This comprehensive guide explains every EV finance option available in Australia, helping you choose the best solution for your circumstances.

Understanding EV Finance in Australia

Electric vehicle finance works similarly to traditional car finance, but with some important differences. Lenders now recognise EVs as viable assets with strong resale values, particularly from established brands like Tesla, BYD, and MG. However, they do assess battery health and warranty coverage as part of the approval process.

The Australian EV finance market has matured significantly, with most major banks and specialist lenders now offering competitive products. Interest rates typically range from 5-12% depending on your credit profile, the finance type, and whether you're a business or individual borrower.

Why Finance Rather Than Buy Outright?

Whilst paying cash might seem like the simplest option, financing offers several advantages:

• Preserve cash flow: Keep your savings invested or available for emergencies rather than tying up $50,000-$100,000 in a depreciating asset
• Tax benefits: Businesses can claim interest, depreciation, and potentially GST. Employees can access pre-tax salary deductions through novated leases
• Upgrade flexibility: Finance typically runs for 3-5 years, allowing you to upgrade to newer EV technology without being stuck with an outdated vehicle
• Opportunity cost: Money invested elsewhere may earn returns that exceed the cost of finance, particularly at current low rates

Business Finance Options for EVs

If you operate a business with an ABN, you have access to tax-effective finance structures that can significantly reduce the true cost of your electric vehicle.

1. Chattel Mortgage (Most Popular for Businesses)

A chattel mortgage is a secured loan where you own the vehicle from day one, but the lender holds a charge over it as security. This is the most popular option for businesses because it provides maximum tax benefits whilst maintaining ownership.

How it works:

• You select your EV and we arrange finance for the purchase price
• The lender pays the dealer/seller and you immediately become the owner
• You make regular repayments (monthly, fortnightly, or weekly) over 1-7 years
• At the end, you own the vehicle outright (or earlier if you pay out the loan)

Tax benefits:

• Claim GST on the purchase price immediately (if GST registered)
• Claim depreciation on the vehicle value each year
• Claim interest expenses as business deductions
• Claim running costs if used for business purposes

Best for: Businesses wanting to own their vehicles, claim maximum tax deductions, and have the flexibility of balloon payments to reduce monthly costs.

Learn more: EV Chattel Mortgage Guide

2. Finance Lease

With a finance lease, the lender owns the vehicle during the lease term. You have full use of it and at the end you can purchase it for the residual value, refinance, or return it.

Key features:

• Lease payments are fully tax-deductible business expenses
• GST can be claimed on each payment (if registered)
• Vehicle stays off your balance sheet
• Flexible end-of-lease options

Best for: Businesses wanting to keep assets off their balance sheet, or those who prefer the flexibility of returning or upgrading vehicles at lease end.

3. Commercial Hire Purchase

Similar to a chattel mortgage, but technically you don't own the vehicle until the final payment is made. Functionally very similar with comparable tax treatment.

4. Novated Lease (For Business Owners Who Are Employees)

If you're a business owner who pays yourself a salary (common for company directors), you may be able to access a novated lease. This allows you to salary package your EV with significant tax advantages.

With the Federal Government's FBT exemption for EVs under $91,387, novated leases have become incredibly attractive. You could save $5,000-$15,000 per year compared to buying the same vehicle with after-tax dollars.

Learn more: EV Novated Lease Guide

Personal Finance Options for EVs

Don't have a business? No problem. Personal EV finance options are readily available for individual buyers.

1. Novated Lease (Employees)

If you're a permanent employee (not a contractor), a novated lease is likely your best option. This is a three-way agreement between you, your employer, and a lease company.

How it works:

• Your employer agrees to deduct lease payments from your pre-tax salary
• All running costs (electricity, insurance, rego, servicing) are bundled into the payment
• Because payments come from pre-tax income, your taxable income reduces significantly
• For EVs under $91,387, there's zero FBT, meaning enormous tax savings

Example savings: An employee earning $90,000/year leasing a $60,000 Tesla Model 3 could save approximately $8,000-$10,000 per year in tax compared to buying with after-tax dollars.

Best for: Permanent employees wanting maximum tax savings and an all-inclusive payment covering all vehicle costs.

2. Personal Car Loan (Secured)

A traditional secured car loan where the EV acts as security. This is the most straightforward option for individuals who don't have access to novated leasing.

Key features:

• No ABN or employer involvement required
• Own the vehicle from day one
• Fixed or variable interest rates available
• Loan terms from 1-7 years
• Typically requires 20-30% deposit

Interest rates: Generally 7-12% depending on your credit score, loan amount, and vehicle age. Rates for new EVs are typically better than used vehicles.

Best for: Individuals who don't have access to novated leasing, or those who prefer the simplicity of a traditional loan structure.

Learn more: Personal EV Loan Guide

3. Personal Loan (Unsecured)

An unsecured personal loan doesn't use the vehicle as security. This provides more flexibility but typically comes with higher interest rates (10-16%).

Best for: Buyers with excellent credit who want the flexibility to sell or upgrade the vehicle without lender involvement, or those purchasing used EVs that don't meet secured loan criteria.

Comparing Your Finance Options

Here's a side-by-side comparison to help you choose:

Finance Type	Who's It For	Key Benefit	Typical Rate
Chattel Mortgage	Businesses (ABN)	Maximum tax deductions	5-9%
Novated Lease	Employees	Huge pre-tax savings + FBT exemption	6-10%
Finance Lease	Businesses (ABN)	Off balance sheet	6-10%
Personal Loan (Secured)	Individuals	Simple, straightforward	7-12%
Personal Loan (Unsecured)	Individuals	Maximum flexibility	10-16%

Decision Tree: Which Option Should You Choose?

If you're a business owner with an ABN:

• Want to own immediately + maximum tax deductions → Chattel Mortgage
• Want flexibility at end of term + off balance sheet → Finance Lease
• Pay yourself a salary? → Consider Novated Lease

If you're an employee:

• Permanent employment + EV under $91,387 → Novated Lease (usually best)
• Casual/contract work → Personal Loan

If you're self-employed (non-business):

• Personal Loan (secured or unsecured depending on credit)

The Application Process

Applying for EV finance is straightforward. Here's what to expect:

Step 1: Choose Your Electric Vehicle

Before applying, you'll need to know which EV you want to purchase. Get a quote from the dealer showing the drive-away price. If buying privately, you'll need the seller's details and vehicle information.

Step 2: Gather Your Documentation

For personal applications:

• Photo ID (driver's licence or passport)
• Proof of income (2-3 recent payslips or tax return if self-employed)
• Bank statements (last 3 months)
• Details of existing debts and expenses
• Vehicle quote or contract of sale

For business applications:

• ABN and business registration details
• Recent financial statements or tax returns
• Bank statements (business and/or personal)
• GST registration details (if applicable)
• Vehicle quote showing GST breakdown

Step 3: Submit Your Application

You can apply online, over the phone, or in person. As a broker, we handle the entire process:

• We assess your needs and recommend the best finance structure
• We compare offers from our panel of lenders
• We submit your application to the most suitable lender(s)
• We negotiate on your behalf for the best rates and terms

Step 4: Assessment & Approval

Most applications are assessed within 24-48 hours. The lender will:

• Check your credit history
• Verify your income and employment
• Assess the vehicle (age, condition, battery warranty)
• Calculate your borrowing capacity

Pre-approval can often be obtained even faster for straightforward applications. Once pre-approved, you can shop for your EV with confidence.

Step 5: Settlement

Once fully approved:

• You review and sign the finance documents
• The lender pays the dealer or seller directly
• You collect your vehicle and start making repayments
• The lender registers their security interest (if applicable)

The entire process from application to driving away typically takes 3-7 days for most customers.

Improving Your Approval Chances

Want to maximise your chances of approval and secure the best rate? Follow these tips:

1. Check Your Credit Score First

Your credit score significantly impacts approval and rates. Check it for free through services like Credit Savvy or Equifax. If your score is below 600, consider:

• Paying down existing debts
• Fixing any errors on your credit file
• Waiting 6-12 months whilst building positive credit history

2. Save a Larger Deposit

Whilst minimum deposits are 10-30% depending on the product, a larger deposit (30-40%) significantly improves your approval chances and may unlock better rates.

3. Reduce Existing Debts

Lenders assess your debt-to-income ratio. Paying off credit cards or personal loans before applying improves this ratio and increases your borrowing capacity.

4. Choose the Right Vehicle

Lenders prefer EVs from established brands with strong resale values. Vehicles like Tesla Model 3/Y, BYD Atto 3, and MG ZS EV are viewed favourably. Newer vehicles with remaining battery warranty are easiest to finance.

5. Consider a Shorter Loan Term

Whilst 5-7 year loans offer lower repayments, 3-4 year terms typically qualify for better interest rates and lower total interest paid.

6. Be Honest and Complete

Provide accurate information on your application. Lenders verify everything, and inconsistencies can result in decline. If you have past credit issues, explain them upfront—lenders appreciate honesty.

Frequently Asked Questions

What is the best way to finance an electric vehicle in Australia?

The best EV finance option depends on your circumstances. Businesses typically benefit most from chattel mortgages (for tax deductions) or novated leases (for FBT exemption). Individuals should consider novated leases if employed, or personal loans if self-employed. Each option has different tax implications and costs.

Can I get a business loan for an electric vehicle?

Yes, businesses with an ABN and 6+ months trading history can access EV finance through chattel mortgages, business loans, or leasing arrangements. Business EV finance allows you to claim GST, depreciation, and interest as tax deductions.

How much deposit do I need for EV finance?

Deposit requirements vary by finance type and lender. Commercial finance typically requires 10-20% deposit, whilst personal loans may require 20-30%. Some lenders offer low-deposit options for borrowers with excellent credit, and novated leases often require minimal upfront costs.

Is it better to buy or finance an electric vehicle?

Financing often makes more sense than buying outright, especially for businesses. Financing preserves cash flow, provides tax benefits, and allows you to claim deductions. For individuals, novated leases offer significant tax savings through pre-tax salary deductions and FBT exemption.

How fast can I get approved for EV finance?

Most EV finance applications are assessed within 24-48 hours. Pre-approval can be obtained even faster for straightforward applications. Final settlement typically takes 3-7 days once all documentation is provided and approved.

Can I finance a used electric vehicle?

Yes, lenders provide finance for used electric vehicles, typically up to 10 years old. Interest rates and loan terms may vary based on the vehicle's age and condition. Lenders will assess battery health and remaining warranty as part of the approval process.

What credit score do I need for EV finance?

Most lenders prefer a credit score of 600 or above for EV finance. Scores above 700 typically secure the best rates. Some specialist lenders consider applications with lower scores, though this usually results in higher interest rates.

Are there government incentives for EV finance in Australia?

The main federal incentive is the FBT exemption for electric vehicles under $91,387 when provided through novated leases. Some states offer additional rebates and stamp duty exemptions. Businesses can claim instant asset write-offs subject to eligibility.

Conclusion

Financing an electric vehicle in Australia has never been easier or more affordable. With multiple finance options available, competitive rates, and significant tax benefits (particularly for businesses and employees), now is an excellent time to make the switch to electric.

The key is choosing the right finance structure for your circumstances. Businesses should explore chattel mortgages or finance leases for maximum tax deductions. Employees should strongly consider novated leases to take advantage of the FBT exemption. Individuals without access to novated leasing can secure competitive personal loans.

Remember, the best finance option isn't just about the interest rate—it's about the total cost after tax benefits, your cash flow situation, and your long-term goals.