'Green' auto loans offer lower rates

"We wanted to do something that not only saved us money but was also good for the environment," she says.

Gearhart, a long-time Addison Avenue customer, says she shopped around and found the green auto loan to be "a really nice incentive." It also had the lowest interest rate she could find.

"Certainly, that was our deciding factor," Gearhart says.

Robert Looby, of Pittstown, N.J., a member at Affinity Federal Credit Union, says he bought a 2008 Ford Focus for himself last summer after buying Focuses for his two daughters.

A committed Ford buyer, Looby had driven a Ford Ranger, but decided he wanted a vehicle that got better gas mileage. So he selected a Focus.

He shopped around for auto loans and found the best deal at Affinity, based in Basking Ridge, N.J., which offers a 0.25 percent discount for autos in the EPA's Green Vehicle Guide. Customers also receive a $50 gas card and a tree planted in their name through the Arbor Day Foundation, says Johanna Gomera, consumer loan manager. Those who have already had an Affinity auto loan get another 0.25 percent discount through the credit union's loyalty program.

“Economic incentives can make all the difference between people taking action or not taking action.”

When shopping for a vehicle loan, the green discount was a nice surprise, Looby says.

"Fuel economy is important, but second to quality to me," he says. "It's all about the bottom line."

Finding green loans

Consumers looking for green loans will have to do a bit of homework.

The loans typically are offered through credit unions and some banks. Consumers can check with their favorite financial institution to see if the lender offers such loans.

Consumers also should be aware that the criteria for what constitutes a "green" auto vary widely.

Some financial institutions -- like Regions Bank, headquartered in Birmingham, Ala. -- limit their green auto loans to hybrids. Others -- like Seattle Metropolitan Credit Union -- rely on the EPA's SmartWay guidelines to determine what constitutes a green vehicle.

Autos with good fuel economy and low emissions can receive the SmartWay designation, and the list of qualifying autos can be found in the EPA's Green Vehicle Guide. These include everything from a gasoline-powered Toyota Camry to a diesel Volkswagen Jetta or a flex-fuel Chevrolet Tahoe.

While some shoppers may think of their wallets before the environment, the end result is the same. Pat Durkin, a partner at Global Vision Advisors in Hingham, Mass., which has a focus on sustainability, believes programs such as green auto loans go a long way to moving consumers into more environmentally friendly vehicles.

"Economic incentives can make all the difference between people taking action or not taking action," Durkin says.

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