Thinking about an electric car? Here’s what it really costs to finance one.

Summary:

Electric car pricing gets all the attention, but running costs, the finance structure you choose, and one 2027 tax deadline decide whether going EV actually saves you money.

• The fuel saving, not the sticker price, is usually what makes an electric car cheaper. One Fox customer spending about $500 a week on fuel came out roughly $16,000 a year better off after finance, charging and maintenance.
• A novated lease can win on tax, but it lowers your pre-tax income, and that can quietly reduce how much a lender says you can borrow for a home in the next year or two.
• The full electric car FBT discount is set to end on 31 March 2027, and the car has to sit under the $91,661 fuel-efficient luxury car tax threshold to qualify (Australian Taxation Office).
• Electric cars can lose value faster on a long hold, which matters if your plan is to sell the car to clear the loan at the end.
• An electric car loan works exactly like any other car loan. A broker can compare it across 50-plus lenders with a single credit enquiry.

An electric car can cost more to buy and still leave you better off. The difference is in what it costs to run and how you finance it, and that is the part most people skip past. You have probably seen the sticker price and the range figures. What is harder to find is a straight answer on electric car loans, running costs, and whether the tax break everyone talks about actually applies to you. This post walks through all of it in plain language, so you can work out what going EV really costs for your situation.

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Are electric cars actually cheaper to run?

For a lot of drivers, yes, and the saving comes from fuel more than anything else. Charging at home is usually far cheaper than filling up, and electric cars have fewer moving parts to service (MoneySmart). How big the gap is depends on how far you drive, your electricity price, and whether you charge at home. The bigger your current fuel bill, the more an electric car tends to save you.

Here is a real example from our own customers. One person was spending around $500 a week on fuel for a work ute, about $26,000 a year. We ran the numbers on a new electric vehicle they could use for the business. Even after the cost of financing the car, charging it and maintaining it, they came out roughly $16,000 a year better off. Since the start of the year we have seen a steady rise in customers moving to EVs, and self-employed people running a work vehicle are now a big part of that, mostly to cut the fuel bill.

The honest caveat: this only stacks up if your driving suits it. If you cover very high kilometres on long country runs, charging time and battery wear start to eat into the saving. Run your own numbers on your real weekly fuel spend before you decide.

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Car loan or novated lease: which is better for an electric car?

For an EV, the two common paths are a standard car loan and a novated lease, and neither is automatically the winner. A car loan means you own the car from day one and repay a lender directly from your after-tax pay. A novated lease is a salary-packaging arrangement through your employer, where payments come out of your pre-tax salary, which can lower your income tax. The right choice depends on your job, your income, and what else you are planning.

The tax appeal of a novated lease on an eligible EV is real, and we always encourage people to investigate it properly. But we have seen the tax angle come apart once it sits next to the rest of someone’s plans.

When a car loan makes more sense

A car loan tends to fit when you value ownership and flexibility. You are not tied to your employer, so changing jobs does not unravel the arrangement. That matters more than people expect: we worked with a customer who was drawn to a novated lease mainly because maintenance was bundled in, until we broke down the ongoing management fee. It came to roughly $3,000 over the term, almost the same as servicing the car normally for three years. Bundling the convenience in nearly doubled what they paid for it. They also did not want to depend on their employer, in an industry where people change jobs about every year.

A car loan also keeps your pre-tax income where it is. That is important if a home is on the horizon. One already-approved customer started looking at a novated lease instead, so we had them talk to our home loans team first. The pre-tax deduction would have dropped their gross income enough to cause serviceability problems on the home loan they were planning. That is the amount a lender will let you borrow based on your income and expenses, and salary packaging can quietly shrink it. They kept the car loan and bought the car.

When a novated lease makes more sense

A novated lease can be the stronger option when your employer offers salary packaging, your income is high enough for the pre-tax saving to bite, and you are not about to apply for a home loan. For an eligible EV under the luxury car tax threshold, the current FBT treatment can make the pre-tax saving meaningful (see the next section for the 2027 deadline that changes this). The trade-offs to weigh are the mandatory residual owed at the end, the management fees, and the fact the whole thing is tied to staying with your employer.

A novated lease and the tax around it are general information only. For advice on your circumstances and any potential tax benefits, speak with your accountant. Fox Finance Group arranges car loans; a novated lease runs through your employer’s salary packaging.

Want a rough sense of repayments before you go any further? Our car loan repayment calculator gives you an indicative figure in a couple of minutes. No application, no credit check.

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What’s happening to the electric car tax break in 2027?

The full FBT discount on an eligible electric car is set to end on 31 March 2027. Right now, an eligible EV provided through a novated lease can be exempt from Fringe Benefits Tax (FBT), the tax normally applied to a salary-packaged car, as long as the car has never had luxury car tax payable on it and sits under the fuel-efficient luxury car tax threshold, which is $91,661 for 2026-27 (Australian Taxation Office). That is the concession doing most of the work in a novated lease saving.

What changes from 1 April 2027 was announced in the 2026-27 Federal Budget and is not yet law, so treat it as the government’s stated plan rather than settled detail. As announced, electric cars costing $75,000 or less keep the full discount; electric cars above $75,000 but under the luxury car tax threshold move to a 25% discount; and from 1 April 2029 all eligible EVs under the threshold receive the 25% discount. Existing leases in place before the change are not affected (Australian Taxation Office). Plug-in hybrids have not been eligible for new arrangements since 1 April 2025.

The plain-English version: the most generous version of this tax break is on a deadline. If a novated lease is part of your thinking, it is worth mapping the timing with your accountant now rather than assuming the full discount will still be there later. A standard car loan is not affected by any of this, because it has nothing to do with FBT.

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Will an electric car hold its value?

It depends heavily on how long you plan to keep it. For a short hold, say a couple of years before you upgrade, an EV can stack up well. Over five years or more, electric cars can depreciate faster than many buyers expect, and that becomes a problem if your plan is to sell the car to clear the finance. A big driver of that is the battery. Once the car is out of warranty, replacement or major repair is expensive, so used buyers pay less, which drags resale down further.

This is worth thinking through whether you are weighing a BYD, a Tesla or anything else. The brand matters less than the fundamentals: how long you will hold it, how far you drive, and whether the resale value is likely to cover what you still owe. If you might sell before the loan is repaid, choosing a loan you can pay out early without penalty gives you room to move. It is one of the first things we check when we compare options across our lender panel.

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How do you get pre-approved for an electric car loan?

An electric car loan works exactly like any other car loan. Same steps, same application, same timeline. The lender looks at your income, your expenses, your credit history and the car itself, then decides what you may be eligible for under responsible lending rules. There is no special EV hurdle to clear.

The one difference worth knowing is the product. A green car loan is a car loan with a discounted rate offered on eligible low-emission vehicles, so an EV can open up sharper pricing than a standard car loan. A bank’s own rate is rarely the most competitive option, especially on specialised EV and green car finance.

This is where a broker earns their place. With Fox Finance Group as your guide, you get access to 50-plus lenders on our panel, clear jargon-free explanations, and options matched to your situation, not just the first rate you are shown. We can check what is available with a single credit enquiry rather than you applying to lender after lender and marking your file each time. Getting pre-approved before you visit a dealer also means you walk in knowing your budget, instead of working it out at the finance desk.

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Is financing an electric car right for you?

An electric car loan is worth pursuing if a few of these sound like you: your weekly fuel spend is high enough that charging would genuinely save you money, you plan to keep the car long enough for those savings to add up but not so long that depreciation works against you or you want to own the car outright and keep the flexibility to change jobs or sell early.

A novated lease may suit you better if your employer offers salary packaging, your income is high enough for the pre-tax saving to matter, and a home loan is not on your horizon in the next year or two. If you are not sure which way the numbers fall, that is exactly the kind of thing worth talking through before you commit to either. Don’t stress about working it out alone. You will have a dedicated lending specialist who can walk you through it and make sure the finance fits what you actually need.

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Ready to compare your electric car loan options?

Whether it is your first car loan or your fourth, Fox Finance Group can compare electric car loans and green car loans across our lender panel, so you know exactly what is out there before you decide. We do the comparison work. You choose what is right for you.

Compare your electric car loan options, or call our friendly team on 1300 665 906. It costs nothing, there is no obligation, and it won’t affect your credit score.