Electric Vehicle Finance

Financing an electric vehicle is mostly the same as financing any car: a lender, a term, security over the vehicle. But three things genuinely change, and one of them can change the answer entirely. Here is what actually differs when the car is electric.

The FBT exemption is the big one

This is the fact that matters most, and it catches people out because it does not apply the way they assume.

An eligible electric vehicle provided through a novated lease is exempt from fringe benefits tax. That exemption is what makes EV novated leases so heavily advertised, and the saving is real: the whole cost can come from pre-tax salary rather than part pre-tax and part post-tax as with a petrol car.

Two limits matter. It only applies to novated leases, so it does nothing for you if you buy the car with a normal car loan. And it only applies to employees whose employer offers salary packaging, so sole traders, contractors paid on invoice and business owners paying themselves outside a salary cannot use it. Eligibility also depends on the car's value sitting under a threshold set by government, and plug-in hybrids lost the exemption from 1 April 2025 unless a binding commitment was already in place.

If you are an employee buying an eligible EV, the honest answer is that a novated lease deserves a serious look before a car loan. Our guides to how a novated lease works and whether a novated lease is worth it set out the mechanics and the trade-offs, including the residual and what happens if you change jobs. If you are not an employee, or the car is not eligible, a straightforward car loan is usually the way.

Buying an EV with a car loan

Nothing exotic here. An EV is financed as a secured loan against the vehicle like any other car, and our guide to secured car loans covers how security works. Lenders assess your income, your existing commitments and your credit file the same way.

Where EVs differ slightly is in how lenders view the asset. The used EV market is younger and moves faster than the petrol market, and some models have depreciated sharply while others have held up. That affects a lender's view of the security, particularly on longer terms, and it is worth knowing before you stretch the term to get the repayment down.

Used EVs: battery health is the thing to check

The single most important question on a second-hand EV is the state of the battery, because it is the most expensive component and it determines the car's real range.

Ask for a state of health reading, which most manufacturers can provide through a service check, and ask what remains of the battery warranty, which is typically separate from and longer than the vehicle warranty and may or may not transfer to a second owner. A car with documented battery health and transferable warranty is both a better buy and an easier finance proposition, because the lender's security is more predictable.

Check charging history too where it is available. Heavy reliance on DC fast charging affects long-term battery condition more than home charging does.

Charging, and what can go in the loan

A home charger is part of the real cost of going electric, and it is worth budgeting for at the outset.

Where a charger is supplied as part of the vehicle purchase and appears on the dealer's invoice, it can generally be financed with the car. Installation is a different matter. Switchboard work, cabling and any electrical upgrade is attached to your house, has no resale value to a lender, and is not financeable as part of a car loan. If your meter box needs work, budget for that separately.

Running costs, honestly

Electricity is cheaper per kilometre than petrol, particularly charging at home off-peak or from solar, and EVs have fewer serviceable parts. Against that, insurance premiums are often higher, tyres wear faster on heavier cars, and some states have introduced or proposed road user charges for electric vehicles. The overall running cost is usually lower, but not by as much as the fuel saving alone suggests, and it varies by state.

Business use

If the EV is for business use, the deductions work as they would for any vehicle: depreciation and the interest component of the finance, apportioned for business use, with the car limit applying. Our guide to business car tax deductions covers the general treatment and chattel mortgages covers the usual structure. The FBT exemption above is a separate matter and applies to novated leases rather than to a business buying a car outright. Confirm your position with your accountant.

Where a broker fits

The decision that matters with an EV is usually structural rather than which lender: novated lease or car loan, and that depends on your employment, the car's eligibility and your marginal rate. Getting that right is worth more than a small difference in rate. We arrange the car loan side and will tell you plainly when a novated lease looks like the better route. Our car loans page sets out what we arrange.

This article is general information only and is not tax, legal or financial advice. FBT rules and the electric vehicle exemption are set by government and change; confirm the current position with your accountant or the ATO.

Damo Treadgold is the director of Treadgold Finance, an FBAA-accredited finance broker on the Sunshine Coast, arranging car, boat, equipment and business finance Australia-wide.

Frequently Asked Questions