Low-rate green loans

Rooftop solar panels are an excellent way to reduce your household's carbon footprint and electricity bills, but they can also attract a pretty significant upfront cost. So how do you fit the expense into your budget or make it a bit more manageable? Fortunately, a number of Australian lenders offer low-rate green loans that could help you save money while you help the planet. 

What types of installations are eligible? 

Renewable energy loans can work in a few different ways, but they usually cover all the costs related to a home solar system installation, which can include the removal of old solar panels. You can also bundle your energy and the installation of a home battery, electric vehicle charger, hot water system and more. Lenders tend to leave the specifics to you and your installer so you can just install the technology that suits you and your household best.

Some low-rate loans may be part of state or local government programs that are facilitated through a lender. The specific terms and conditions of these loans and what is covered in the low-rate loan will depend on each program. Not sure if you’re eligible for a renewable energy government subsidy? Check out our guide to each state’s incentives here. 

Rates

Some lenders are now offering green loans for rates as low as 5%, however, the exact interest rate will vary depending on a number of factors, including the lender, your credit score, and your personal financial circumstances.¹

To get an accurate idea of the interest rate you may be eligible for, make sure to compare any potential lenders before submitting any application. 

Fees

We know it can be easy to get hung up on the low interest rate, but it’s important to also take a close look at any fees you might be required to pay as these can add up quickly.

A few fee types you can expect to see are:

• Establishment fee
• Monthly fees
• Late or missed repayment fees
• Early exit fees 

These are often built into your regular repayments and are paid off over the life of the loan. If you’re keen to repay the loan early, make sure to choose a lender who won’t charge you additional payment or early exit fees.  

Repayments

The good news is that low-rate green loan repayments are pretty straightforward. You’ll make regular weekly, fortnightly or monthly payments to the lender, usually via direct debit. Got a bit of spare cash and want to make an extra repayment? Most lenders will have an easy online portal for borrowers so you can make additional repayments when it suits you. 

Some lenders will allow you to customise your repayment date or schedule which means you could line it up with your pay cycle to help you better manage your budget. If you do miss a payment, you can expect to be charged a missed or late payment fee, and the specific amount will be outlined in your contract. 

How to apply

To get the ball rolling on a low-rate green loan, you may either submit the application yourself on the lender’s website or your installers may submit the application on your behalf as they know the ins and outs of the equipment being installed and the total cost. This means you can rest easy knowing you’re borrowing the exact amount you need to cover the installation. 

Like any loan, you’ll be asked to provide details including (but not limited to) personal details, proof of identity and income, and you may be asked for a range of supporting documents to help your lender accurately review your application. 

While low-rate green loans are a great way to make rooftop solar more accessible in Australia, you should also keep in mind that a low interest rate isn’t the only thing to consider when choosing a lender. You’ll also want to look at the total cost of the loan, the repayment period, the loan terms available, and any potential fees before making a decision.

Source:

¹ Finder (February 2023)