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Personal loans for solar panels and home improvements

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How can solar panels help my home?

There are a number of ways solar panels could be beneficial for your home. Some of these include:

1. Electricity bill savings

Depending on what type of property you live in, how many family members live under your roof and what kind of heating or cooling systems you have, there’s a chance you might be spending more than you’d like to on your energy bills. Using solar panels to generate your own power will generally allow you to reduce this expense.

You’ll likely see higher savings on your energy bills if the majority of your electricity usage happens during the day, when your solar panels are generating energy. Unless, however, you also invest in a solar battery to store excess power.

Of course, installing solar panels does come at a cost, so it’s important to do your own calculations to ensure you come out on top in the long run. One easy way to do this is to check your latest energy bill, find the current price per kWh you pay, and then use a solar power savings calculator to determine what potential financial benefits could apply to you.

2. Value added to your property

As well as saving you money on your energy bills, solar panels could potentially also make your house more valuable.

According to an Origin Energy survey of 1,003 Australians, 77 per cent think a house with solar is more valuable than one relying on traditional energy sources. A total of 57 per cent of homeowners said they would pay up to $10,000 more for a home equipped with solar, and 60 per cent would pay at least that much more for a home with both solar and a battery wall.

In addition, 55 per cent of renters said they would be willing to pay up to $10 a week more in rent for a property with solar power.

This could be welcome news, particularly for homeowners who decide to move before they have recouped the cost of the solar panels in the way of energy bill savings.

3. Environmental benefits

With electricity emissions making up a substantial proportion of Australia’s greenhouse gas emissions, switching to solar energy could be a big step towards reducing your household’s carbon footprint.

How much do solar panels cost?

After you have a gained an understanding of the potential benefits and savings solar panels could provide, it’s important to consider the installation costs.

While for many, these figures may seem like a major investment, it’s worth weighing up the expense with the savings you could make over time. Plus, there are solar panel government subsidies available that help reduce installation costs.

The price of a solar system is of course dependent on the size of the installation, which can be measured in how many kiloWatts (kW) are installed. Consider getting a personalised quote to determine what size is right for your home.

According to SolarQuotes, the approximate cost (after subsidies) of a good quality solar system installation with Tier 1 solar panels at the time of writing is:

  • 3kW : $3,500 – $5,000
  • 5kW : $4,500 – $8,000
  • 10kW: $8,000 – $12,000

How do solar power government incentives work?

The federal government provides eligible parties who choose to install solar panels with access to a financial incentive. That is, households and small businesses in Australia that install a small-scale renewable energy system may be eligible to receive a benefit under the Small-scale Renewable Energy Scheme (SRES) to help with the purchase cost.

The amount that you may be eligible to receive depends on how many solar panels you buy, where you live and when you have them installed. This SolarQuotes Rebate Calculator could help you determine the maximum financial incentive available to you.

Where can I get solar panels?

Making the decision to install a solar panel system is a big financial commitment and long-term investment, so it’s important to do your due diligence first.

Solar panels come in a range of different wattages and power levels to suit individual needs. There are a wide selection of brands available, with updated technology regularly emerging. Although some systems might look similar, they have varied levels of power, quality and reliability.

When it comes to choosing the right system, consider shopping around, get multiple quotes and make a thorough comparison. Another thing to keep in mind is that in order to be eligible for the SRES, the system must be installed by a Clean Energy Council (CEC) accredited installer. The CEC has a database of accredited installers that you can search through.

Why might I consider a personal loan for solar panels?

Solar panel installation is an expense that many may not have the savings to pay for upfront but are eager to access the benefits from as early as possible. This is where a personal loan could come in handy.

There are a number of lenders that offer environmentally-friendly products, called ‘green loans’, that can be used to fund solar panel installation.

To find the most competitive loan product for your individual financial needs, RateCity’s personal loan comparison tool might be useful.

Keep in mind when taking out a personal loan that they will always cost you in the form of interest and/or fees.

RateCity’s personal loan calculator could also help by giving you an estimate of what your repayments might look like, once you know how much you want to borrow.

Frequently asked questions

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.

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 are the pros and cons of debt consolidation?

In some instances, debt consolidation can help borrowers reduce their repayments or simplify them. For example, someone might take out a $7,000 personal loan at an interest rate of 8 per cent so they can repay an existing $4,000 personal loan at 10 per cent and a $3,000 credit card loan at 20 per cent.

However, debt consolidation can backfire if the borrower spends the extra money instead of using it to repay the new 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.

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.

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.

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.

What causes bad credit history?

Bad credit history is caused by filing for bankruptcy, defaulting on your debts, falling behind on your repayments and having loan applications rejected. Lenders are wary of borrowers who demonstrate this sort of behaviour because it suggests they might struggle to repay future loans.

Borrowers with bad credit may find it more difficult to be approved for a loan, or they may get higher interest rates when they do get approved.

Which lenders offer bad credit personal loans?

Several dozen lenders offer bad credit personal loans in Australia. These are generally smaller lenders that aren’t household names.

What is an unsecured bad credit personal loan?

A bad credit personal loan is ‘unsecured’ when the borrower doesn’t offer up an asset, such as a car or jewellery, as collateral or security. Lenders generally charge higher interest rates on unsecured loans than secured loans.

What is a secured bad credit personal loan?

A bad credit personal loan is 'secured' when the borrower offers up an asset, such as a car or jewellery, as collateral or security. If the borrower fails to repay the loan, the lender can then seize the asset to recoup its losses.

How do you get a bad credit personal loan?

You can get a bad credit personal loan by applying directly to a lender, by going through a mortgage broker or by using a comparison website like RateCity.

How much can I borrow with a personal loan?

It’s unusual for a lender to provide a personal loan of above $100,000, although there is no formal limit. As with all lending products, each lender sets its own policies, while each borrower is assessed on a case-by-case basis.

What is a bad credit rating/score?

Credit ratings or credit scores are calculated by credit reporting bodies such as Equifax, Dun & Bradstreet, Experian and the Tasmanian Collection Service. These are separate organisations, so they use different systems.

Equifax gives scores between 0 and 1,200:

  • 833 to 1,200 = Excellent
  • 726 to 823 = Very good
  • 622 to 725 = Good
  • 510 to 621 = Average
  • 509 or less = Below average

Dun & Bradstreet (through the Credit Simple service) gives scores between 0 and 1,000:

  • 800 to 1,000 = High end
  • 700 to 799 = Great
  • 500 to 699 = Average
  • 300 to 499 = Room to improve
  • 299 or less = Low

Experian gives scores between 0 and 999:

  • 961 to 999 = Excellent
  • 881 to 960 = Good
  • 721 to 880 = Fair
  • 561 to 720 = Poor
  • 0 to 560 = Very poor

The Tasmanian Collection Service doesn’t give scores. Instead, it prepares credit reports for credit providers and then lets those providers make their own assessment.

When was comprehensive credit reporting introduced?

Comprehensive credit reporting was introduced to make credit reports fairer and more accurate. Under the previous system, credit providers only saw negative information about potential borrowers. Now, they're able to see both positive and negative information, which means that credit providers can see if a borrower’s negative credit behaviour is consistent or a mere one-off.

Who calculates your credit rating/score?

Credit ratings or credit scores are calculated by credit reporting bodies. The main bodies are Equifax, Dun & Bradstreet, Experian and the Tasmanian Collection Service.

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.

Can I get guaranteed approval for a bad credit personal loan?

Few, if any, lenders would be willing to give guaranteed approval for a bad credit personal loan. Borrowers with bad credit histories can have more complicated financial circumstances than other borrowers, so lenders will want time to study your application. 

It’s all about risk. When someone applies for a personal loan, the lender evaluates how likely that borrower would be to repay the money. Lenders are more willing to give personal loans to borrowers with good credit than bad credit because there’s a higher likelihood that the personal loan will be repaid. 

So a borrower with good credit is more likely to have a loan approved and to be approved faster, while a borrower with bad credit is less likely to have a loan approved and, if they are approved, may be approved slower.

What causes bad credit ratings/scores?

Failing to repay loans and bills will damage your credit score. So will falling behind on your repayments. Your credit score will also suffer if you apply for credit too often or have credit applications rejected.