What is a green personal loan, and how can it help you?

As we continue to educate ourselves on the impact our lifestyle choices have on the environment, plenty of eco-conscious Australians are taking action to reduce their carbon footprint wherever possible. For many, this begins with creating an environmentally sustainable home.

Depending on when your home was built and how many eco-friendly features it already has in place, there might be a fair few steps you could take to create a more sustainable space. From solar panels to grey water treatment systems, these kinds of updates are not only good for the environment, they also have the potential to benefit you financially.

The use of solar panels, for example, can typically help reduce the cost of your energy bills as they allow you to generate your own power. Of course, like any home update, these come at a cost, so it’s important to do your due diligence and shop around before you make any decisions.

If you don’t want to spend your savings on your sustainability projects, or you don’t quite have the full amount upfront, you may want to consider your financing options in order to get the ball rolling sooner. It might be handy to know that some lenders provide green personal loans specifically designed to cover these sorts of expenses.

What is a green personal loan?

Green personal loans work much the same as regular personal loans, but with a few key differences. Lenders offer green personal loans to borrowers who specifically want to purchase and/or install eligible energy-efficient products for their home.

This particular type of personal loan often has more competitive interest rates than regular personal loans, as lenders incentivise borrowers to ‘go green’.

Like any loan, when comparing green personal loans, you may want to weigh up all of the defining features each product has to offer in order to make a choice that’s right for you. Some things to consider include:

• Interest rates
• Fixed vs variable rates
• Fees
• Loan terms
• Extra features
• Lender’s reputation

Ask the lender for information about how it determines a particular loan's purpose to be ‘green’ and how it contributes to the environmental sustainability of the property.

What can a green personal loan be used for?

There are a number of environmentally friendly products that you may be able to finance with a green loan. These could include:

• Solar hot water systems, solar pool heaters, rooftop solar panels and battery storage systems
• Selected energy efficient white goods and appliances - minimum star ratings may apply
• Grey water treatment systems
• Rainwater tanks
• Insulation
• Double glazing
• Wind turbines
• External awnings
• Selected reverse cycle or zoned air conditioners and energy efficient electric heaters – minimum star ratings may apply
• Evaporative coolers and home ventilation systems
• Light-emitting diode (LED) lighting

How can a green personal loan help me?

A green personal loan might be able to help you get started on your energy-saving goals without you having to fund the projects upfront. This could mean living in an environmentally sustainable home sooner than you might have otherwise been able to, and in turn seeing the potential savings that come as a result.

Before you apply for a green personal loan, consider taking the following steps:

1. Research: Shopping around and doing your research will allow you to gain a comprehensive understanding of how much you might need to borrow to achieve your goals. 
2. Do the maths: Weigh up the costs with any potential savings to make an educated decision on what’s right for you.
3. Compare loans: Search and compare green personal loans, ensuring your desired purchases are eligible. Ask the lender if you want to know more about how they determine a particular loan’s purpose to be ‘green'. 
4. Calculate an estimate: RateCity’s Personal Loan Calculator can give you an estimate of what your repayments might look like.

This process could help you make an informed decision when it comes to choosing a green personal loan that works for your individual financial situation.

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