Peter Weekes reviews a new type of car loan.
What is the mecu goGreen Car Loan? This is Australia's first home loan that is tied, through a tree-planting program, to offsetting the greenhouse gas emissions produced by the car purchased.
What is mecu? mecu (members and education credit union) is based in Melbourne, with offices along the eastern seaboard. It has more than 127,000 members and $1 billion in assets.
How does the loan work? The goGreen car loan is targeted at people who are concerned about the effect vehicle emissions have on the environment, but who need a car for transport. mecu has teamed up with Greenfleet - a not-for-profit environmental organisation - to plant and maintain 17 native trees every year of a loan's life. The cost of this to mecu is $30 a year.
What does the loan cost? The loan is priced in one of two ways: the car's environmental efficiency (for new cars only) or its age (for used cars).
New cars that consume 6 litres per 100 kilometres in a city circle will attract an interest rate of 6.99 per cent (or a true comparison rate of 7.01 per cent). This rate would apply to the Honda Insight, Honda Jazz GLI, Toyota Plus and Daihatsu Sirion.
New cars that consume 8 litres of petrol will attract an interest rate of 7.99 per cent (true rate of 8.01 percent) and include Ford Focus 1.8L CL, Holden Barina SXI and a Toyota Corolla Ascent.
The rate scale rises to 12.25 per cent (12.27 percent) for a car that is older than five years. The maximum term of the loan varies between seven and nine years, depending on the car. There are no fees attached to the loan.
How does it compare? The lowest mecu rate at 6.99 per cent is one of the cheapest on the market, according to InfoChoice, but your choice of car is limited. Also, the "dirtier" the car gets, the less competitive the rate becomes, with better rates offered elsewhere.
What evidence is there that growing 17 trees cancels out greenhouse emissions? Transport is Australia's fastest growing source of greenhouse gas emissions, with our road transport sector accounting for 66.6 million tonnes of emissions every year, rising 20.3 per cent since the 1990s. The Bureau of Transport Economics estimates that without significant reduction measures, emissions will rise a further 38 per cent by 2010.
Greenfleet says that once the trees are fully grown, they will absorb as much carbon dioxide as the car emits every year.
And as an environmental bonus, native trees will be planted along the Murray Darling Basin. Greenfleet's Henry
O'Clery says the trees will not only
absorb CO2 emissions, they will also help to tackle salinity, improve the water quality and provide essential habitat for endangered species.
Where it fits in New cars have never been more affordable. CommSec's car affordability index found that it now takes an average wage earner just 34 weeks to buy an average family sedan (a Holden Commodore V6 auto), compared with about 44 weeks eight years ago. This is one of the reasons that car sales are at historic highs, with about 900,000 vehicles purchased in the year to November.
The goGreen car loan is the first in a planned roll-out of a number of "socially responsible" financial products by mecu. The loan is the only one on the market.
More information at www.mecu.com.au
