Bank Ends Fossil Fuel Lending in Favor of Electric Vehicle Financing Plans
A Danish bank will no longer provide auto loans for cars powered by fossil fuels in an attempt to encourage customers to consider electric vehicles, which are more environmentally friendly.
Merkur Andelskasse, a Denmark-based financial institution, announced that there will be no more financing options for car buyers who wish to receive loans for gasoline automobiles. The strategy is expected to convince many customers who look to Merkur for loans to consider sustainable transportation options, as the bank offers the best interest rates for electric cars in Denmark, according to ABC Nyheter.
Instead, loans will be offered only for battery electric vehicles and plug-in hybrids. Merkur Andelskasse CEO Charlotte Skovgaard announced the strategy in a press release.
“Together with our customers, we will always be at the forefront of the most sustainable development. Our goal is to constantly push for development. We are doing it now by saying ‘no’ to financing new gasoline and diesel cars, ”Skovgaard said. “We understand this may not be as well received and popular with everyone and may cost customers in the short term.”
While Merkur will offer the lowest rates for electric cars with a nominal variable interest rate of 1.75%, plug-in hybrid vehicles will receive the bank’s second lowest rates.
It is obvious to The Merkur site that driving sustainable options is of the utmost importance to the business. The mindset is that if people want a reasonable interest rate and want a loan for their new car, they have to consider electric vehicles or plug-in hybrids. The technique is expected to convince some buyers to drive a green vehicle simply because the cost of the loan is considerably cheaper than buying a gasoline or diesel machine.
The strategy is also expected to help Denmark increase the number of electric vehicles in the country. In 2019, electric cars only accounted for 2.4% of the country’s total vehicle fleet. According to Electric Vehicle Sales Blog, the share of electric cars in Denmark reached 8.5% in March, driven by the Tesla Model 3 and Mitsubishi Outlander PHEV.
However, the Danish government has implemented a series of oil phase-out targets that will come into effect in 2030.
All new cars manufactured in 2030 will have to be low-emission machines. Just five years later, in 2035, vehicles will need to have zero emissions.
“In the short term, it is more sustainable to use existing cars at the end of their life than to produce new ones, even if they run on electricity,” said Skovgaard.
Merkur will still offer financing options on used fossil fuel vehicles as long as they are classified in energy classes A through A +++. “Our long-term goal is to stop financing all fossil fuel cars.”