What is a Zero-Interest Payment Plan (ZIPP)?
A green loan is a type of personal loan that can be used to fund the purchase and installation of approved clean energy products. At Plenti, we offer Zero-Interest Payment Plans on eligible green energy projects purchased through an installation partner.
It's an easy choice if you’re exploring your options for financing a solar energy system. But that’s not all they can be used for — they can also cover things like:
· Solar panels and home batteries
· Solar pool heating units
· Energy-efficient lighting
· Air source heat pumps
· Power factor correction
· Variable speed and frequency drives.
How does a Zero-Interest Payment Plan work?
A ZIPP is a way to finance a green energy project with one key difference from traditional loans. To understand the difference, let’s look at how basic loans work.
For most standard loans, there are two main components:
Principal – the amount you borrow and need to repay, also known as the total loan amount.
Interest – an additional amount you need to repay, usually expressed as a percentage of the total loan amount. The interest is what it costs you to borrow the money. Interest can be fixed (locked in at a usually higher rate) or variable (usually a lower rate but can fluctuate with the market).
But that’s not the end of the story. You’ll often be charged other fees on top of the interest. To understand the true cost of the loan, you need to factor in these fees. These can include:
Upfront fees – also called establishment fees, this is the cost to set up the loan. Although charged at the start of the loan, they are often capitalised, meaning they are added to the loan (increasing your total loan amount) and paid off as part of your regular repayments.
Monthly fees – also called ongoing, account keeping or loan management fees, they’re an administrative cost from your lender to maintain the loan. You make them in addition to your scheduled loan repayments and they don’t go towards paying back your loan at all.
These fees are included in the loan’s comparison rate, which is the interest rate plus any fees and charges, expressed as a percentage of the loan. So typically when you compare loans, you don’t just compare the interest rate, you compare the comparison rate.
But there’s still more to the story. Depending on how you manage your loan repayments, you may also be charged fees if you make payments late or pay out your loan early. These are:
Penalty fees – most commonly charged if you default on your loan by either missing a repayment or not having enough money in your bank account when a loan repayment is due.
Early repayment fees – also known as exit fees, this is a charge if you repay your loan in full prior to the completion of your loan term.
A ZIPP is different. You don’t pay any interest at all – you only pay the monthly fee. And although you may still be charged a penalty fee if you miss a repayment, you typically aren’t charged an early repayment fee if things are going well and you choose to repay your loan early.
Why should I go with a Zero-Interest Payment Plan?
A ZIPP is a simple and transparent way of accessing renewable finance. Because you only pay a monthly fee (on top of your regular repayments), you can borrow more without it costing you more. You also have certainty about exactly how much your loan will cost you, so you can budget for it down to the cent. And if the market changes, you won’t be exposed to a skyrocketing interest rate.
It also gives you greater flexibility. Often what you purchase with your green loan helps you save money on your energy bills. A great way to use those savings is to pay back your loan early. If you want to repay your loan early you usually won’t be charged an early repayment fee.
How much can I borrow?
With our new Zero Interest Payment Plan, you can borrow up to $30,000 and have from 3 to 6 years to repay your loan - and up to 10 years if funding battery storage. With 90-95% of loans approved, it’s an exciting and accessible choice.
Of course, what you purchase needs to be eligible for a green loan. Green loan renewable energy products must meet strict standards of efficiency and performance. But we work with a range of suppliers with access to our affordable, transparent and fair residential financing solutions for their customers, making it easy for you to choose. We can also pay them directly, making it easier for you.
Who is eligible for a Zero-Interest Payment Plan?
The extra good news about a ZIPP is that it’s an unsecured loan, so you don’t need to use an asset (like your house) as security. But we’re still responsible lenders. To be eligible for our Zero Interest Repayment Plan you must be using an accredited installer partner and:
· Be over 18 years old
· Be an Australian citizen or permanent resident
· Have a valid driver licence, Medicare Card or Australian Passport
· Own (or be purchasing) their own home
· Have a clear credit file
· Be employed >25 hours a week, a self-funded retiree or receiving a government pension
Further eligibility requirements may apply.
How do I compare Zero-Interest Payment Plan?
When comparing your green finance options, it’s important to consider what’s right for you. If you’re looking for simple, regular repayments and finance that gives you complete control over your money, a Zero-Interest Payment Plan might be what you’re looking for.