What is a green personal loan?
No, green personal loans aren’t for frogs. Green personal loans are pretty much the same as a regular personal loan - but with an eco-friendly difference.
A green personal loan works just like a regular personal loan, but they are specifically designed for the purchase and installation of energy-efficient goods and other eco-related expenses to make your home more environmentally friendly.
Besides being good for the planet, green personal loans are also good for your wallet because they usually have more competitive interest rates than regular personal loans to encourage borrowers to go green.
Green personal loans are available as secured or unsecured loans, offer flexible borrowing limits and varying loan terms from one to ten years.
What can a green personal loan be used for?
Green personal loans can only be used to purchase energy efficient products. Some green personal loans can only be used for a specific range of items while other green personal loans may allow you to purchase any goods that are energy-efficient.
Green personal loans generally cover the purchase and installation of the following sustainable items:
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Solar panels
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Solar hot water systems
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Insulation
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Electric or hybrid vehicles
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Rainwater tanks
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Solar pool heaters
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External awnings
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Energy-efficient lighting
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Energy-efficient air conditioning or heaters
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Energy efficient white goods or appliances (minimum star ratings may apply)
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Battery systems to store solar energy
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Double glazing for windows
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Grey water treatment systems
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Electric vehicle charging stations
How to compare green personal loans
Check what the green personal loan can be used for
Depending on the lender, not all of the energy-efficient products we’ve listed above are eligible for a green personal loan. Some green personal loans can only be used for a specific range of items, such as Plenti’s green personal loan which is to be used primarily for solar panels and battery installations.
Renewable and energy-efficient products often have to meet strict standards of performance and efficiency. To find out if the energy-efficient item you want to purchase is eligible, contact the green loan provider or read the product disclosure statement (PDS).
Competitive interest rate
Green personal loans generally have more competitive interest rates than standard personal loans to incentivise borrowers to purchase energy-efficient products for their home. However, you should still shop around and see how the rate stacks up against other green personal loan options.
According to Savings.com.au’s research, the lowest interest rate for a green personal loan is 3.65% p.a. while the highest are around 7% p.a. up to 11.79% p.a. - so it pays to compare your options.
Comparison rate
Comparison rates factor in some of the built-in fees over the loan term, giving you a more accurate picture of how the loan compares to others in terms of costs. Don’t forget to factor in the comparison rate when comparing green personal loan options.
Minimum loan amount
Make sure the minimum loan amount is enough to cover your needs. Perhaps you want to purchase a $700 energy-efficient fridge, but the lowest minimum loan amount is $1,000 in which case you may have to consider another financing option.
Repayment flexibility
The last thing you should look out for when comparing green personal loans is repayment flexibility - are you able to pay off the loan early without incurring a penalty? Does the loan allow you to make extra repayments?
Savings.com.au’s two cents
If you’re thinking about making your home more energy-efficient but don’t have the funds right now to make that dream a reality, a green personal loan can help you achieve that goal. Going green can be expensive initially, but taking out a green personal loan can help make those costs more manageable.
Besides, investing in energy-efficient appliances and renewable energy now may help reduce your household bills in the future, so it could end up paying for itself in the long-run.
