Bank Stops Gas-Powered Vehicle Loans For EVs Only

In an attempt to encourage the use of electric vehicles a bank in Denmark is setting a trend for only providing auto loans for EVs. Internal combustion vehicles will no longer be eligible. The bank, Merkur Andelskasse, made the announcement so potential loan customers will know the bank’s financial options. Or rather the bank’s lack of options. Not only that but the bank is advertising it has the best interest rates for its EV loans in the country at 1.75%.

In a press release bank CEO Charlotte Skovgaard said, “Together with our customers, we will always take the lead in the most sustainable development. Our goal is to push for development constantly. We do this now by saying “no” to financing new gasoline and diesel cars,” Skovgaard said. “We understand that this may not be as well received and popular with everyone and that it may cost customers in the short term.”

The bank wants the Danes to ditch diesel and gas for electric or rechargeable hybrid vehicles

used cars for sale in a suburban dealership
Used car showroom. | Getty

Merkur wants the Danes to ditch gas and diesel for electric or rechargeable hybrid vehicles according to abc nyheter. If buyers need a loan and are concerned about how much interest they will pay then naturally they would consider Merkur’s loan. In turn that encourages them to at least look at sustainable vehicles. 

Electric vehicles have been slow to become accepted. In 2019 only 2.4% of the vehicles sold there were EVs. But in March of this year, it had substantially increased to 8.5%. The best-selling EVs there are the Tesla Model 3 and Mitsubishi Outlander PHEV.

By 2035 all vehicles sold must be zero-emissions

Getting a new car loan
Getting a car loan | Getty

The Danish government has imposed strict goals for the elimination of vehicles with emissions. All vehicles by 2030 have to be low-emissions to become registered. By 2035 all vehicles sold must be zero-emissions. “In the short term, it is more sustainable to use the existing cars at the end of life than it is to produce new ones, even if they are running on electricity,” Skovgaard said.

Merkur will still offer financing options on used fossil fuel vehicles as long as they are rated with the A to A+++ energy classes. “Our goal is, in the long term, to stop funding all fossil fuel cars.”

Would this type of loan regulation work in the US?

women browsing for cars at a Ford dealer
Cars for sale at a Ford dealership | Spencer Platt/Getty Images

Auto Lenders About To Collapse From Defaults

Would this type of loan regulation work in the US? Do you think you could be compelled to purchase an EV if you knew the financing would be low? Right now there are plenty of manufacturers offering 0% loans so things would need to change for this to stand a chance of seeing positive results.

In 2019 the average new car loan in the US was 5.76%. Those with the worst credit scores saw loans as high as 21.54%. That’s a crazy amount of money to be paying interest on. Used car loans on average were a bit higher than new at 9.49%. The average loan duration was 60 months. Lower interest rates are generally seen with shorter loan durations.