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

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

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.
  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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Learn more about personal loans

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

Can I merge my personal loan with my home loan?

Yes, you can refinance your home loan and, in the process, merge or consolidate your personal loan and home loan. By doing so, you can lower the number of debts you have, and you may also reduce the total interest you have to pay.

However, you should consult a financial advisor or a mortgage broker to confirm that you are decreasing your total outstanding debt, including interest payments. The repayment term for a home loan can be much longer than that for a personal loan, and by merging the two, you could be repaying a higher amount over the full term.

Can unemployed single parents get personal loans?

It can be more difficult for unemployed borrowers to successfully apply for a personal loan. Most lenders require borrowers to have a regular income available to cover the cost of loan repayments.

If you’re self-employed, or if less than half of your income comes from Centrelink, you may not be eligible for some personal loan options. Consider contacting the lender before applying.

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

How much can you borrow with a bad credit personal loan?

Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans, they also get loaned less money. Each lender has its own policies and loan limits, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.

Is a personal loan a variable or fixed-rate loan?

Depending on the personal loan lender, you may be able to choose between a fixed and a variable interest rate. But, there are a few distinct differences between the two, so it’s important to weigh up the pros and cons before deciding on what’s right for you.

A fixed interest rate loan gets you the convenience of knowing exactly how much you need to repay each fortnight or month. On the other hand, you generally won’t be able to make lump sum or advanced payments to close your personal loan early - or at least not without a penalty.

With a variable interest rate personal loan, you may be able to get a longer loan repayment term, with the option of paying off the loan early. You typically won’t need to pay any additional charges for an early full repayment either. The potential disadvantage with an interest rate that can change is that your repayment is not entirely predictable, as it can fluctuate with the market. However, you’ll likely have more options as more lenders offer a variable interest rate personal loan.

Can I repay a $3000 personal loan early?

If you receive a financial windfall (e.g. tax refund, inheritance, bonus), using some of this money to make extra repayments onto your personal loan or medium amount loan could help reduce the total interest you’re charged on your loan, or help clear your debt ahead of schedule.

Check your loan’s terms and conditions before paying extra onto your loan, as some lenders charge fees for making extra repayments, or early exit fees for clearing your debt ahead of the agreed term.

How long does it take to get a student personal loan?

Completing an online personal loan application can often take anywhere from 10 minutes to 1 hour. Depending on your lender, processing your personal loan application may take anywhere between 1 and 24 hours. If your personal loan application is approved, you may receive the money in your bank account the following business day, or, in some cases, the same day.

Do student personal loans require security?

While some personal loans can be secured by the value of an asset, such as a car or equity in a property, student personal loans are often unsecured, which typically have higher interest rates.

Some lenders also offer guarantor personal loans to students. These loans have lower interest rates, as a guarantor (usually a relative of the borrower with good credit) will fully or partially guarantee the loan, taking on the financial responsibility if the borrower defaults.

Can single mothers get personal loans online?

Many lenders offer online applications for personal loans, which can be convenient for borrowers who have busy lives. If you’re not confident your personal loan application will be approved, you may want to consider contacting the lender by email, live chat, phone, or by visiting a branch, to discuss your situation before applying.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

What do single parents need for a personal loan application?

Much like applying for other personal loans, applying for personal loans for single parents will likely require the following:

  • Proof of identity
  • Proof of residence
  • Proof of income
  • Details of assets (e.g. car, home)
  • Details of liabilities (e.g. credit cards, other loans)
  • Loan amount
  • Loan term