How you might save money on solar panels with a green loan

Photo by Vivint Solar on Unsplash

For many the barrier to installing solar panels is price - pure and simple. Of course the irony is that if you can afford the initial outlay, having solar panels is actually a money saver. 

Let’s look at an example of this: Rob who lives in NSW could save just under $1,000 a year by switching to solar*. In ten years the savings could be nearly $10,000! That estimate is from a rough calculation taking into account Rob's:

  • postcode
  • the quoted cost of a 3.3kW system
  • the direction his house faces
  • how much his energy provider charges per kWh
  • an estimate of how much he pays for energy in a year
  • the average feed in tariff rate (16c according to SolarQuotes)

Use SolarQuotes' calculator to work out a rough estimate of how much you could save in energy bills.

A green personal loan, the pros and cons

Of course, while the savings are nothing to be sniffed at, shelling out $5,000 to $10,000 in one go simply isn’t an option for a lot of people. If that is your current situation then you might have considered a personal loan.

Before we go any further, let's have a quick look at the pros and cons of taking out a 'green personal loan.'

As mentioned above, green personal loans often come with lower interest rates. This is a sort of incentive on the lender's behalf for you to buy or invest in something more sustainable.

To illustrate this we can look at a few interest rate averages, based on information in the Mozo database. So right now the average interest rate for a standard unsecured loan is 10.32%, while for a comparable green loan it's 7.01%*.

Working out the cost

Here are a few examples, to give you an idea of how much you might have to pay in instalments.^

Example 1

Say someone wants to buy a 5kW solar panel system. According to SolarQuotes this could cost between $4,500 and $8,000. Let's assume that the person has been quoted $6,000 and they intend on financing it with Australian Military Bank's Green Loan. Some of the costs this person would have to pay include:

  • a $150 application fee
  • a $10 monthly service fee
  • interest on repayments, from 3.65% p.a. (4.59% p.a. comparison rate*)

This particular loan offers loan terms between one and seven years. A longer loan term will mean smaller regular repayments, but more interest paid overall. On the other side of things, a shorter loan term will come with larger regular repayments, but less interest paid overall. 

With a three-year loan term and the above interest rate, monthly repayments would be around $176, plus the $10 service fee, using the same scenario. The total interest paid over the three years would be around $344. 

So altogether, this borrower would wind up paying around $6,850 in total. That's taking into account the initial loan amount, interest, $360 for three years worth of monthly service fees and the $150 application fee. 

Example 2

In another scenario, let's say someone wants to buy a bigger, 8kW solar panel system. According to SolarQuotes, prices for systems this size range from around $7,500 to $11,000. So in our fictional scenario, let's say the person has been quoted $9,000 and intends to borrow that amount from Hunter United.

Hunter United offers a Green Saver Personal Loan. This particular loan comes with:

  • a $200 application fee
  • interest rates from 6.99% p.a. (8.36% p.a. comparison rate*)

To keep repayments manageable, this person may opt for a slightly longer five-year loan term. With that loan term and the above interest rate, monthly repayments for $9,000 would be around $178. The total interest paid over the full five years would be approximately $1,690.

So overall, this borrower would wind up paying around $10,890 for their solar panels. That's taking into consideration the initial $9,000 loan, the interest and the $200 application fee. This particular loan doesn't charge a monthly service fee.

Green loans on offer

If you've come this far, then right about now you probably want to know what green loan options are out there. A few green loans to consider are:

Feeling motivated to go green? Use our personal loan repayment calculator, to work out how much your monthly repayments might be. Or if none of the loans above appeal to you, head to Mozo's compare personal loans page for more options. You'll be generating your own energy in no time!

Compare personal loans - last updated February 27, 2021

Search promoted personal loans below or do a full Mozo database search. Advertiser disclosure.
  • Hot DealNo Fee Personal Loan for loans up to $50,000!
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*Name has been changed for privacy.

**Average interest rates reflect the lowest interest rates offered for loans, available for customers with a good credit rating. Based on information available in the Mozo database and correct as of 17 February 2021.

^Examples calculated using Mozo’s personal loan repayment calculator.

^See information about the Mozo Experts Choice Personal Loans Awards

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