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Learn more about personal loans

What is a green personal loan?

Just like a standard personal loan, a green personal loan is a type of credit product that allows you to borrow a sum of money for a specific purpose, to be repaid with interest over a set period of time.

The key difference between a standard personal loan and a green personal loan is the purpose for which it can be used. While standard personal loans can be used for a wide range of different purposes, green personal loans are to be used specifically for the purchase of environmentally friendly products.

What can you use a green personal loan for?

Plenty of Australian lenders allow borrowers to take out green personal loans to fund the cost of a broad selection of eco-friendly home improvement projects and products, including:

  • Solar hot water systems, rooftop solar panels and battery storage systems
  • Energy efficient white goods and appliances that meet a minimum star rating
  • Grey water treatment systems
  • Rainwater tanks
  • Double glazing
  • External awnings
  • Reverse cycle or zoned air conditioners and energy efficient electric heaters that meet a minimum star rating
  • LED lighting

Investing in these sorts of purchases not only has the potential to offer environmental benefits, but it could also save you money on your electricity bills and potentially add value to your property.

Plus, lenders typically offer green personal loans with lower rates than standard personal loans to reward borrowers for 'going green'.

What other types of green loans are there?

Green home loan

One alternative to a green personal loan is a green home loan which is available to borrowers who are looking to buy an energy efficient property. This may be an option for those yet to purchase a property, or those looking to refinance in order to make environmentally friendly home improvements.

Green car loan

Another type of green personal loan is a green car loan, which is a type of car financing specifically for eco-friendly vehicles such as electric or hybrid vehicles, or those that produce less carbon dioxide emissions than traditional fuel-powered cars.

Who can get a green personal loan in Australia?

As long as an applicant's loan purpose meets the specific lending criteria for a green personal loan, the eligibility requirements are generally consistent with a standard personal loan, requiring the borrower to:

  • Be 18 years of age or older
  • Be an Australian citizen or permanent resident
  • Earn a regular income

Some lenders may also require borrowers to meet a minimum credit score. Eligibility requirements can differ between lenders, so it might be worth reaching out to your preferred credit provider for more information.

How do you compare green personal loans?

Making a comprehensive comparison of your green personal loan options is much the same as a standard personal loan comparison. Here are some of the most important features to consider when shopping for your best fit:

Loan amount - Personal loans are paid out in a fixed amount, so it's important to have a solid idea of how much your purchase or project will cost and determine the loan amount before you apply.

Interest rates - The loan's interest rate will determine how much you pay in interest. You'll need to choose between a fixed rate that stays the same throughout the loan, or a variable rate that can fluctuate with the market. Just remember that if a low rate loan has high fees, it may not be the most competitive option.

Comparison rates - Comparison rates can give you a better idea of which loans may be the most competitive, as they include the loan's interest rate plus the main fees attached.

Loan term - The loan term is the amount of time you have to pay back your loan. Personal loan terms are commonly three to five years long, but shorter and longer terms are typically also available. Keep in mind that as a general rule of thumb, the longer the loan term, the cheaper the loan repayments - but the more interest you will likely pay over the life of the loan. Shorter loan terms may have more expensive repayments, but you'll likely pay less in total interest.

Extra features - Some lenders may offer extra features that could be important to you, such as:

  • Unlimited extra repayments so you have the option to pay down the loan faster
  • A redraw facility so that you are able to redraw any additional repayments you have made
  • Flexible repayment options such as the option to make weekly, fortnightly or monthly repayments

Fees - The kinds of fees you may be charged tend to differ from one lender to the next, but often include:

  • Application fees
  • Establishment fees
  • Extra repayment fees
  • Early repayment fees
  • Redraw fees
  • Other ongoing fees

Frequently asked questions

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 are personal loans regulated?

Personal lenders in Australia are regulated by ASIC (the Australian Securities & Investments Commission) and must follow responsible lending rules. That means they can’t lend money without making “reasonable inquiries” about a borrower’s financial situation and ensuring the loan is “not unsuitable” for them.

Can I get a personal loan if I receive Centrelink payments?

It is hard, but not impossible, to qualify for a personal loan if you receive Centrelink payments.

Some lenders won’t lend money to people who are on welfare. However, other lenders will simply consider Centrelink payments as another factor to weigh up when they assess a person’s capacity to repay a loan. You should check with any prospective lender about their criteria before making a personal loan application.

Where can I get a personal loan?

The Australian personal loans market contains dozens of lenders offering several hundred different products. Personal loans are available through a range of institutions, including:

There are three main ways to access personal loans. You can go through a comparison website, such as RateCity. You can use a finance broker. Or you can directly contact the lender.

What are the pros and cons of personal loans?

The advantages of personal loans are that they’re easier to obtain than mortgages and usually have lower interest rates than credit cards.

One disadvantage with personal loans is that you have to go through a formal application process, unlike when you borrow money on your credit card. Another disadvantage is that you’ll be charged a higher interest rate than if you borrowed the money as part of a mortgage.

How long do personal loans take?

Depending on the lender, some personal loan applications can be approved in as little as one hour, or you may need to wait until the next business day. If approved, you may receive your money on the same day, the next business day, or within the week.

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.

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 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.

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 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.

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.

Does refinancing a personal loan hurt your credit score?

Personal loan refinancing means taking out a new loan with more desirable terms in order to access a more competitive interest rate, longer loan term, better features, or even to consolidate debts.

In some situations, refinancing a personal loan can improve your credit score, while in others, it may have a negative impact. If you refinance multiple loans by consolidating these into one loan, it could improve your credit score as you’ll have only one outstanding debt liability. Your credit may also improve if you consistently pay the instalments on time.

However, applying to refinance with multiple lenders could negatively affect your credit if your applications are rejected. Also, if you delay or default the repayment, your credit score reduces.

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.

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.

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.

Can you pay off a quick loan early?

Many lenders will allow you to make extra repayments onto a quick personal loan when you can afford them, or even exit the loan early, which can help reduce the total interest you are charged. Be sure to check your quick loan’s terms and conditions, as some lenders charge early exit fees for paying off a loan ahead of schedule.

Can I get a bad credit personal loan with a guarantor?

Some lenders will consider personal loan applications from a borrower with bad credit if the borrower has a family member with good credit willing to guarantee the loan (a guarantor).

If the borrower fails to pay back their personal loan, it will be their guarantor’s responsibility to cover the repayments.

Can I get an easy/instant personal loan?

Some lenders are able to approve applications with little documentation and within minutes. However, there is a catch. People who take out easy/instant loans generally pay higher interest rates and are restricted to lower amounts than people who follow a traditional borrowing process.