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:
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.
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.
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.
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 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 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.
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).
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.
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.
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.
South Australian residents can get rebates and incentives for upgrades including:
In Western Australia, you can get incentive for solar and other energy-efficient upgrades, including:
The Northern Territory incentives and rebates for sustainable upgrades cover:
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
Compare productsUse 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 websiteIf 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 loanSubmit 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 decisionIf 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.
Check out the Finder Personal and Car Loan Awards winners and finalists for 2024.
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