Green loans

Home solar, electric cars and energy-efficient systems for air conditioning or hot water can save you a lot of money in the long run. Whether you’re just a bit short on cash or want to finance an efficient system outright, green personal loans can step in to help you take advantage of these opportunities.

How does a green personal loan work?

These personal loans can generally be put towards an approved range of energy and cost-saving purchases. The loan terms can be flexible, and may vary depending on your purchase.

• Secured and unsecured. You can find both secured and unsecured green loans.
• Varying repayment periods. Terms range from as little as 6 months to as long as 7 years.
• Flexible borrowing limits. There are a lot of potential purchases that qualify for green loans, reflected in a wide range of borrowing limits to suit different items.
• Early repayments. You’ll often be able to make early repayments without penalty.

	How much you can borrow	Comparison rates	Loan terms available	Features
Bendigo Bank Green Personal Loan	$2,000 minimum	Rates may vary	Loan periods from 1 to 7 years	Make unlimited additional repayments, and choose flexible weekly, fortnightly or monthly repayments Access additional repayments with an online redraw, and choose from secured or unsecured green loans.
Community First Credit Union Green Loan	$1,000 to $50,000	4.99% p.a.	1 to 10 years	There are no monthly fees and you can make early repayments without penalty You can make extra repayments and redraw your money as you need it
Humm Green Loan	$1 to $30,000	0% interest.	6 to 60 months	Buy now, pay later on solar panels from a range of retailers Interest free payments on solar panels for up to 60 months (in some circumstances) $8 monthly fee An establishment fee of between $35 and $90 applies, depending on price
Hunter United Green Personal Loan	$2,000 to $30,000	8.36% p.a.	Up to 7 years	Get rates from 6.99% p.a., and make variable and lump sum repayments early without penalty There is a $200 processing fee included in the loan
Nova Credit Union Green Loans	You may be able to borrow as much or as little as you need, within reason and depending on your situation.	7.45% p.a.	Choose from a flexible range of repayment periods	Flexibly tailor your loan, and take advantage of potentially competitive interest rates Make early repayments without penalty, pay no monthly fees and access a redraw facility as needed
LCU Green Personal Loan	$2,000 to $50,000	6.78% p.a.	Loan periods up to 7 years	Make weekly, fortnightly or monthly repayments, and pay it back early without penalty There are no ongoing fees or redraw fees, and you can set up repayments automatically to be drawn from your salary
Plenti Green loans	$2,001 to $45,000	7.81% p.a.	3 to 7 years	Good borrowers can find lower rates, and there are no early repayment penalties or exit fees to worry about Choose from secured and unsecured loans, and take advantage of flexible loan options

What can a green loan be used for?

Some green loans can only be used with a specific range of items, while others can be put towards almost anything eco-friendly.

Energy-efficient purchases can include almost anything that directly cuts your energy bill, or helps you use less energy.

Green purchases might include:

• A solar power system. Solar systems harness clean energy from the sun to power your home. Check out our page on solar panel finance for more details on how to fund the purchase of solar panels.
• A solar hot water system. Older hot water systems can be big energy users, but modern solar hot water systems use clean, renewable energy from the sun and can substantially lower your power bills.
• Energy-efficient appliances. Use the Energy Star rating scheme to find the most energy-efficient washing machines, dryers, fridges, dishwashers and more.
• Energy-efficient heating and/or cooling. Older air conditioners and heaters can churn through energy like there's no tomorrow, so consider upgrading to a modern, more energy-efficient option. Solar pool heaters can also provide a cleaner, renewable way to keep your pool temperature at just the right level all year round.
• Insulation installation. Insulation for the ceiling, floor and walls can help your home stay at a comfortable temperature all year round, reducing heating and cooling costs.
• Double glazing for windows. Just like insulation, double glazing can help keep the heat out in summer and lock out the cold in winter.

How much will it cost to upgrade my home to be more energy efficient?

Costs vary substantially based on the upgrades you want to make to your home. For example, buying an energy-efficient washing machine or dryer could be less than $1,000, though some high-end models with excellent energy ratings can be a little more expensive.

However, some other upgrades can be significantly more expensive. A decent-sized solar power system could set you back more than $6,000, while buying a split-system air conditioning unit and having it installed could cost $5,000.

There are several factors that affect total cost, including the upgrades you make, the size of your home and installation/labour costs where you live, so make sure to shop around for the best deal.

How do energy rebates work?

There are several government initiatives in place across Australia to help you save money when upgrading your home to be more energy efficient:

• Renewable power incentives. Right across Australia, homeowners who install small-scale renewable energy systems or eligible hot water systems can receive help with the upfront cost of purchasing and installing those systems under the Small-scale Renewable Energy Scheme.
• Electricity feed-in tariffs. The extra energy you generate from small-scale wind turbine, solar or hydro systems and then feed back into the grid allows you to receive a renewable energy feed-in tariff.
• Home energy incentives. The Energy Saver Incentive in Victoria and the Residential Energy Efficiency Scheme (REES) in South Australia offer discounts to help homeowners add insulation, buy more efficient heating and cooling systems, and perform a range of other upgrades.
• Appliance purchases. NSW's Energy Efficient Fridge and Television Discounts program allows some concession card holders to save up to 40-50% when replacing old TVs and fridges, while Victoria's Home Energy Incentive allows you to access discounts on a range of energy-efficient appliances if you buy from a participating business.

How to compare green loans

Make sure you can put the loan towards your intended purchase. When deciding on a lender, consider features including:

• Interest rates. Look at whether the rates are fixed or variable, and see how it compares to other loan options.
• Comparison rates. Comparison rates for personal loans include built-in fees for the first year of the loan, so you can get more of an idea how loans compare to each other.
• Minimum loan amount. Make sure you can borrow as little, or as much, as suits your needs.
• Application fee. Consider any application fees, and all other fees that may apply.
• Repayment flexibility. Are you able to make early repayments without penalty?
• Security. It is a secured or an unsecured loan?

Things to avoid when taking out a green loan

• Borrowing too much. To maximise your value for money, you may want to only borrow as much as you need, and using savings for the rest, rather than financing more.
• Unlicensed lenders. Make sure you’re dealer with a reputable lender, licensed and listed on the ASIC professional register.
• Excessive fees and charges. Watch out for excessive application fees, and any others which might to be paid.

Frequently asked questions about green loans

Am I eligible for a loan?

Different lenders have different eligibility requirements. To be eligible for a green personal loan you will typically need to be age 18+, an Australian resident and you will need to be using it to improve your environmental efficiency.

How much can I borrow?

The minimum and maximum borrowing amounts vary between lenders, and may depend on what you’re using the money for.

Is it worth using a loan to go green?

It depends on your situation. Sometimes it might be more worthwhile than others. In the long run, buying a $1,000 energy-efficient refrigerator with the help of a $500 loan might be better value than just buying a $500 fridge with your savings.

Similarly, using a green loan to install a home solar system might end up saving someone more than if they had to wait another 5 years.

Picture: Shutterstock