What is a green loan?
Green loans are almost exactly the same as normal personal loans in Australia, usually with lower rates. The only difference is funds from a green loan must be used for environmentally friendly upgrades, such as:
- Efficient heating or cooling systems
- Solar power installation
- Batteries for solar storage
- Water tanks
- Insulation for your roof or walls
- Double-glazed windows
- Other renovations to improve your home's sustainability rating
- Hybrid and electric vehicles
Some green loans are similar to personal loans and others are attached to an existing home loan. In most cases, you'll borrow the funds you need, then make regular repayments of interest and fees over a set period of time.
Why should I get a green loan?
As well as supporting the environment, making greener choices helps you save money. By choosing products that are more efficient, you'll consume less power, fuel and water – and that means lower bills. The same goes for sustainable home improvements.
In fact, the 2022 Finder Green Consumer Report found that people with solar panels would save an average of $732 each year – and stop 3.9 metric tonnes of carbon being released.
Using energy-efficient appliances would save $209 each year and switching to an electric car offers yearly savings of $1,126.
Is it worth using a loan to go green?
Green loans typically charge interest rates between 5% p.a. to 14% p.a. Some lenders offer special deals and Finder has recorded rates going as low as 0.99% for environmentally-friendly purchases.
For example, the cost of setting up a home solar PV (photovoltaic) system can range from $2,800 to $14,100 according to the Clean Energy Council. And electric vehicle prices currently range from around $43,000 to over $100,000.
If your savings won't cover the full cost, a green loan means you can still make the switch when you want to – then pay it off in a timeframe that suits you.
What kind of green loans can I apply for?
Green home loans
Green home loans offer discounted rates and other benefits when you buy or build a home with key sustainability features, such as an energy rating of 7 stars or more.
Green renovation loans
Green renovation loans help you pay for home improvements like insulation, efficient heating and cooling systems or solar power. They can be offered as personal loans or green home loans.
Green car loans
Green car loans are available for both electric vehicles and eligible hybrid vehicles and can offer better interest rates than other car loans. There are also some green personal loans you can get to buy a bicycle, ebike, scooter or other type of green transport.
How can I compare green loans?
What the green loan covers
Each green loan has a list of eligible green energy products or sustainable purchases you can use it for. Some loans also have technical specifications, such as the minimum amount of energy a solar system needs to be able to generate or a minimum efficiency rating (e.g. at least 5 stars).
Secured and unsecured loans
Some green loans are secured against your home or vehicle, if you're buying a new EV for example. Secured loans typically offer lower rates and higher amounts of money to borrow because there is less risk for lenders – so they can be suited to bigger green upgrades. But unsecured green loans aren't tied to your assets and can offer more flexible features, such as shorter minimum repayment terms.
Green loan interest rates start from 0.99% p.a. but can be 13.99% p.a. or more. The rate can also be affected by how much you borrow, how long you take to pay off the loan (its term) and other features – each loan will have clear details about costs before you apply.
One-off application fees and monthly fees are the 2 main account costs to check before you apply. If you want to try and pay off the loan early, check for early exit fees and additional payment fees. Not all green loans charge these fees, so checking before you get a loan can help you save down the track.
How much do green loans cost?
Interest rates for green loans typically range from 0.99% p.a. to 14% p.a. Some green loans also have application fees of around $100–$300 or monthly fees of around $5–$11.
So the amount you borrow, the length of time you want to pay it off and the loan itself all influence how much it will cost. Let's take a look at some different examples.
You want to install a $10,000 solar system on your home. If you got a 3-year green loan with a 0.99% p.a. interest rate and no other fees, your monthly repayments would be $282.04. That means you'd pay around $153.44 in interest over the life of the loan.
You plan to buy a $70,000 electric vehicle and pay it off over 5 years. If you got a green car loan with a 5.29% p.a. interest rate and a $195 application fee, your monthly repayments would be $1,334.01. Over the 5-year term it would cost around $10,013 in interest.
You decide to upgrade your split-cycle air-conditioning unit to a more energy-efficient model that costs $5,000. A 1-year green loan with a 3.99% p.a. interest rate and a $10 monthly fee would have repayments of around $435.73 and cost a total of $229 in interest.
Want more tips and insights on comparing loans? Check out Finder's guide to personal loans.
Are there any government programs that help with the cost of energy-efficient upgrades?
The federal government offers incentives for purchasing and installing renewable energy systems through the Small-scale Renewable Energy Scheme (SRES). This gives you a way to get a discount or delayed payment on solar power, solar water heaters and other eligible systems.
Across Australia, you'll also get solar feed-in tariffs – which basically means extra solar power you send to the grid is "bought back" from you. Each state and territory also offer different incentives. For full details of current offers, visit the federal government's energy website.
- Discounts on installation of solar panels and energy-saving appliances through the NSW Energy Savings Scheme (ESS)
- Solar battery installation discounts
- $3,000 EV rebates
- Solar and energy-efficient incentives for low income households
- Installing or upgrading to an energy-efficient air conditioner
- $3,000 EV rebates
- Solar power incentives
- Energy-efficient heating and cooling upgrades
- Electric water heater upgrades
- Batteries for rooftop solar
- 2 years free registration for EVs and no stamp duty
- Removal of wood heaters
- Heating and cooling upgrades
- Energy-efficient appliances including fridges, heaters and hot water systems
- Solar hot water
- Solar panels
- Solar batteries
- $3,000 EV rebates
- Rooftop solar power
- Solar water heaters
- Air source heat pumps
- No stamp duty on electric vehicles
South Australian residents can get rebates and incentives for upgrades including:
- Upgrading to energy- and water-efficient home appliances
- Solar hot water
- Solar battery installation
- Solar panel installation for low income households
- $3,000 EV rebates
In Western Australia, you can get incentive for solar and other energy-efficient upgrades, including:
- Solar energy buy-back payments when you feed power to the grid
- Installation of solar, hydro or wind-based small renewable energy systems, as well as eligible hot water systems (under the federal government's Small-scale Renewable Energy Scheme)
- Energy efficiency support for households facing hardship
- $3,500 EV rebates
The Northern Territory incentives and rebates for sustainable upgrades cover:
- Grants to buy and install solar PV systems with a battery and inverter
- Grants to install an EV charger
- $1,000 EV grants
- Vehicle registration and stamp duty concessions for EVs
- Renewable power incentives through the federal government's Small-scale Renewable Energy Scheme
Who is eligible for a green loan?
People making green home improvements
If you're a homeowner and want to install a solar power system or other sustainability improvements.
People buying a more sustainable vehicle
If you want to get an EV, hybrid car, scooter, ebike or bicycle. Some green loans are also available for related equipment, such as home EV charging stations.
Other eligibility requirements
- You'll need to be at least 18 years old
- You will need to meet the lending requirements for the loan. This typically includes details of your employment and income as well as your credit history.
How can I apply for a green loan?
Use Finder's comparison table to find a loan that suits you. Pay attention to the interest rate, comparison rate, fees and ability to make extra repayments.
Go to the lender's website
If you find a loan you like on Finder, click 'Go to Site' to be taken directly to the lender's website, where you can find more information or get a quote.
Apply for the loan
Submit your application for the loan. It will help to have the right documents on hand, such as your driver's license and any income/employment details.
Review and make your decision
If you're approved, the lender will send you a final quote. Typically, this can take from a few minutes to a few business days. Review the details and accept or reject the offer.
Why compare personal loans with Finder?
Our personal loan comparison is completely free to use. There are no costs at all for you to use our database to find a better deal. Better still, we regularly run exclusive deals that you won't find on any other site.
We've researched and reviewed hundreds of loans as part of our Finder Awards. Our database and tables are always up-to-date and our in-house experts regularly appear on Sunrise, 7News and SBS News.
We are independently owned and have a mission to help Australians make better financial decisions. That means our opinions are our own and you can compare nearly every personal loan in Australia (and find a better deal).
Since 2014, we've helped 300,000+ people find a personal loan by explaining your options simply. You don't need to give us any details to use our comparison. We're here to help you make a decision.
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