Bank’s shock car loan announcement for customers

A major Australian bank says it will stop offering car loans for two types of vehicles in an aggressive move to battle climate change.

A major Australian bank has announced it will stop offering loans for new petrol and diesel cars as part of an aggressive approach to combat climate change.

Bank Australia says it will cease funding for new fossil fuel vehicles from 2025 onwards, though will continue to offer customers finance for second-hand petrol and diesel cars.

“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,” the bank’s chief impact officer Sasha Courville said.

Bank Australia says it will only offer for new cars which are electric. Picture: NewsWire/Sarah Marshall.

The bank made the announcements at the National Electric Vehicle Summit in Canberra and defended the policy’s introduction in just over two years, saying urgent action was needed to keep global temperature rises below 1.5 degrees.

“We’ve chosen 2025 because the change to electric vehicles needs to happen quickly, and we believe it can with the right supporting policies in place to bring a greater range of more affordable electric vehicles to Australia,” Ms Courville said.

Bank Australia will stop offering loans for new petrol and fossil fuel cars in 2025. Picture: NCA NewsWire / Paul Jeffers.

The Victorian-base bank, formerly known as Bankmecu, has for the last four years offered lower interest rates for low emission vehicles, runs its operations on 100% renewable energy and earlier this year set a net zero target for 2034.

A combination of factors have kepts Australian drivers out of the EV market - including the availability of charging stations, long waitlists and high prices compared to petrol vehicles.

But Ms Courville said Bank Australia wanted to send a message to the market that customers should think about buying an electric vehicle, but would continue to offer loans for second-hand fossil fuel cars.

“We are deeply aware that we need to support people not yet able to afford an electric vehicle while the market grows,” Ms Courville said.

“We’ll continue to offer loans for second hand fossil fuel vehicles until there is a viable and thriving market for electric vehicles.”