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Zero-interest Payment Options

The world of finance is built around interest rates. Whether it’s a credit card purchase, a small personal loan or a home mortgage, you’ll usually be charged interest on top of the amount you borrow. But did you know, if you’re interested in a green loan, rates can drop as low as 0%? How is this possible? And what’s the catch?

Don’t be left wondering. Get up to speed with our guide to 0% green loans.

What is a 0% interest green loan?

A standard green loan is a type of personal loan that can be used to fund the purchase and installation of approved clean energy products. They’re an obvious choice if you’re wondering: what is the best way to finance solar? But that’s not all they can be used for. Think things like:

· Solar panels and home batteries

· Solar pool heating units

· Energy-efficient lighting

· Energy-efficient air conditioning units

· Hybrid low emission cars

· Air source heat pumps

· Power factor correction

· Variable speed and frequency drives.

They’re typically offered at a lower interest rate than traditional loans, making it easier for you to access finance for purchases that make a difference to your energy consumption. They’ve been popular since a government green loans program (offering low-cost finance for green home improvements) finished about a decade ago.

But there’s a special kind of green loan that’s offered with a 0% interest payment plan. That’s right, 0% interest green loan rates, so you won’t pay a cent in interest. As low-rate green personal loans go, that’s as low as you can get.

How does a 0% interest green loan work?

A 0% interest green loan is a green loan with a difference. 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 0% interest green loan 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 get a 0% interest green loan?

A 0% interest green loan 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 your 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 $45,000 and have from 3 to 6 years to repay your loan. And 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 0% interest green loan?

The extra good news about a 0% interest green loan 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 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 0% interest green loans

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, 0% interest green loan might be what you’re looking for.

Our 0% Green Loan Comparison [SA(1] calculator allows you to compare green loans and repayments against other lenders across a wide range of green loans up to $45,000, to help you choose the right loan for you.

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