Tesla showroom in Century City mall, Los Angeles (Credit: Teslarati)

Bank ends fossil fuel loans in favor of EV-driven financing plans

A Danish bank will no longer provide automotive loans for cars powered by fossil fuels in an attempt to encourage customers to consider electric vehicles, which are more environmentally-conscious.

Merkur Andelskasse, a Denmark-based financial institution, has announced that there will no longer be financing options for car buyers who are interested in receiving loans for gas-powered automobiles. The strategy should convince many customers who go to Merkur for loans to consider sustainable transportation options because the bank offers the best interest rates for electric cars in Denmark, according to ABC Nyheter.

Instead, loans will be offered for battery-electric and rechargeable hybrid vehicles only. Merkur Andelskasse CEO Charlotte Skovgaard announced the strategy in a press release.

“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.”

While Merkur will offer the lowest rates for electric cars with a 1.75% nominal variable interest rate, rechargeable hybrid vehicles will receive the second-lowest rates from the bank.

It is evident from Merkur’s website that driving sustainable options is of utmost importance to the company. The mentality is, if people want a reasonable interest rate and want a loan for their new car, they must consider electric vehicles or plug-in hybrids. The technique should convince some buyers to drive an Earth-friendly vehicle simply because the cost of the loan is considerably less expensive than buying a gasoline or diesel-powered machine.

The strategy should also help Denmark’s push to increase the number of electric vehicles in the country. In 2019, electric cars made up only 2.4 percent of the country’s total vehicle fleet. According to the EV Sales Blog, Denmark’s electric car share reached 8.5% in March, led by the Tesla Model 3 and Mitsubishi Outlander PHEV.

However, the Danish government has implemented a series of petrol phase-out goals that will take effect in 2030.

All new cars manufactured in 2030 will have to be low-emissions machines. Just five years later, in 2035, vehicles will be required to have zero emissions.

“In the short term, it is more sustainable to use the existing cars, in 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.”

Bank ends fossil fuel loans in favor of EV-driven financing plans
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