Clean Car Programme: how do feebates affect my vehicle finance?
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By now we understand the basics of the New Zealand Government's new Clean Car "feebate" programme. Until the end of the year, buyers of brand-new Electric Vehicles (EVs) will get $8625 (BEV, pure-electric) or $5750 (PHEV, plug-in hybrid) back following the purchase of a vehicle.
Used-import purchasers get $3450/$2450, providing the BEV/PHEV is being registered in NZ for the first time.
From January 2022, the feebate scheme extends to all vehicles, with a sliding scale of rebates for those under 146g/km (maximum $8625) and fees for those above 192g/km (maximum $5175).
Clearly, feebates will have a major influence on buying decisions. But with the potential for money to come back or extra costs to be applied to vehicle purchases, how will the finance business fit around the scheme?
DRIVEN reached out to a number of finance companies for advice on how feebates will affect car buyers.
The focus at the moment is on rebates for EVs, as they are now in effect. The wider scheme won't kick in until next year.
One clear message from the finance industry is that rebates are completely separate to any finance taken out. Vehicles have to be paid for in full and registered before the owner can apply for the rebate (they must supply a sale agreement, for example).
So buyers could theoretically finance the full amount and simply treat the rebate as a "cashback", although the wisdom of that might be questionable when they are paying interest on the full amount as part of the original finance contract.
"If the customer does successfully receive the rebate, they can use it at their discretion," an AA Money spokesperson told DRIVEN. "If they choose to to use the rebate to make a lump sum payment on their loan, AA Money will treat this like any other early payment. We think it will be important for customers purchasing vehicles on finance that attract the rebate to consider the financial implications of retaining it and continuing to pay finance costs over the term of the loan.
Assuming a customer needs to finance the full pre-rebate amount, the really big question is whether they can then repay that sum back into the original loan without incurring penalties. That's up to individual finance companies (after all, it's their business to calculate loans and interest based on pre-agreed amounts and timeframes), so it's up to the individual consumer to check before they sign on the dotted line.
AA Money's position: "The customer may, at their discretion, repay the rebate immediately to AA Money to reduce their loan and therefore financing costs. AA Money does not charge any early repayment fees for this or any other lump sum repayment, as we want our customers to make the right decision for themselves."
Come January 2022, if consumers are financing a vehicle that attracts a fee (WLTP3 emissions in excess of 192g/km), it's a very different scenario. The fee must be paid in full before the vehicle can be deemed registered by Waka Kotahi, so buyers have to come up with that money separately. However, finance companies may certainly consider including this amount as part of the full finance package - again, it's up to the individual consumer to check.
AA Money: "[We] will consider financing this element, if requested by the customer, and subject to our lending policy."