According to a report published by the Green Energy Regulator, the Solar industry has grown to 7.8% per year totaling 3 billion in 2023. Till now, Australians have installed more than 3.5 billion solar systems at home or businesses. Clean Energy Regulator highlighted that around 400,000 solar rooftop PV systems were installed through some kind of solar finance scheme. It implies that more people are exploring solar system loan options. Solar finance refers to the various financial products and services available to individuals and businesses looking to finance the installation of solar energy systems such as government schemes, rebates or financing options such as green loans. There are several ways to get solar system financing in Western Australia. Here are a few options:
Many banks and lending institutions offer solar loans specifically for the purpose of financing solar panel installations. These loans typically have lower interest rates than personal loans or credit cards, and may be easier to obtain if you have a good credit score.
Home Equity Loans
If you own your home and have equity built up, you can consider taking out a home equity loan to finance your solar panel installation. This may have lower interest rates than personal loans or credit cards, and the interest may be tax-deductible.
Some solar companies offer leases, where you pay a monthly fee to lease the solar panels and the associated equipment. This can be a good option if you don’t have the upfront capital to pay for the installation, but still want to enjoy the benefits of solar power.
Power Purchase Agreements (PPAs)
With a PPA, a solar company installs the solar panels on your property and you agree to purchase the energy generated by the panels at a set price per kilowatt hour. This can be a good option if you want to avoid the upfront costs of solar installation and only pay for the energy you use.
It’s important to shop around and compare different financing options to find the one that works best for you. You can also check with the Western Australian government to see if there are any incentives or rebates available for solar panel installations.
A financial institution can offer a green loan to a customer, provided that the funds are used for an environmentally beneficial purpose. These loans can be used to purchase eco-friendly products for the home or to buy a more environmentally friendly vehicle, such as an electric or hybrid. Additionally, there are green home loans that are now available in the market.
How Solar Loan Works?
Solar loans are a good way of going green and becoming solar energy reliant without having to pay in full. If you purchase a PV system on a solar loan, it will significantly reduce your power bill and start saving a bit. In a few years, your payment towards the loan would be paid without you waiting to save and get a solar system.
Many solar system finance providers offer interest-free loans along with zero deposits. The application process and approval process are swift and quite easy.
How to Get a Solar Loan?
To get a solar loan in Western Australia, you can follow these steps:
Research lenders: Look for banks or financial institutions that offer solar loans. You can check their interest rates, fees, and eligibility requirements to find a lender that suits your needs.
Check eligibility: Before applying for a solar loan, check the lender’s eligibility criteria. Some lenders may require a minimum credit score, a certain level of income, or a certain level of equity in your property.
Get a quote for your solar installation: Contact a solar installation company to get a quote for your solar installation. This will help you determine the amount of financing you need.
Apply for the loan: Once you’ve chosen a lender and determined the amount you need, you can apply for the solar loan. You’ll need to provide information about your income, credit history, and the solar installation quote.
Provide documentation: You may need to provide additional documentation to support your loan application, such as proof of income, bank statements, and proof of identity.
Get approval: If your loan application is approved, you’ll receive the funds to pay for your solar installation. You can then proceed with the installation and begin enjoying the benefits of solar power.
It’s important to compare different lenders and financing options to find the best deal for your solar loan. You can also check with the Western Australian government to see if there are any incentives or rebates available for solar panel installations, which can help offset the cost of the loan.
For taking a solar loan, you will have to first find out the type of solar system you need. It will help you in determining the amount that you might want to borrow. Look for lenders that offer solar loans and compare their interest rates, terms, and fees. Your credit score will play a crucial role in determining your eligibility for a solar loan and the interest rate you may be offered.
You just need to follow these steps to get approval for a solar loan:
- Applicant’s identity proof
- Pay slip or any other official document or proof of income which says that the applicants can repay the loan.
- Identify what kind of solar system you are planning to install
- Ask your vendor for a quote
- Contact a loan provider and apply
- Do necessary changes or provide additional information, if required
- Get the solar loan instantly
The whole process is done digitally. An applicant can know within minutes if he is qualified to get on with his solar loan. It is hard to shed $5000-$6000 for a solar system therefore, interest-free loans are a must.
Different Options for Solar Loan
Some private institutions and the Federal and State Governments of Australia offer myriad solar finance options such as incentives, rebates, leases, PPAs and loans to name a few. A citizen planning to go green by taking a solar loan must go through every option and process with what fits the best. Some of them are given here for comparison.
- Green Loan
This unsecured personal loan is offered specifically for purchasing anything environmentally friendly. They have low-interest rates and long-term repayment options. The only catch is that you need to have a good credit score to avail of this. A few institutions provide green loans as of now and only on approved renewable products such as:
- Bendigo Bank
- Commonwealth Bank
- Community First Credit Union
- Regional Australia Bank
2. Interest-Free Solar Loans
These interest-free loans are good for people who do not have a good credit score rating. They do not charge any interest but to make up for the solar finance institution’s fee, your solar installer may quote an extra price or the loan application may ask for a hefty fee which may go up from 15% to 30% of the actual prices of your solar PV system. The term is also shorter resulting in higher monthly instalments. You don’t have to take this unless you have a poor credit score.
3. Personal Loans
A personal solar system loan is one of the best options are you have many options to choose from. Many institutions provide such loans and you may even get interest rates lower than green loans with additional benefits. They are much easier to get approved than green loans. However, fishing for a personal loan that checks all the boxes can be tricky. This is for you if you have strong headhunting and bargaining skills.
4. Solar Mortgage
You may apply for a solar system loan by providing your house as a guarantee. This way you end up having lower interest rates than a green loan. Since this is a secured loan, you may get it if you do not have the ideal credit score for taking loans. This is also good for people who are already paying the mortgage for their house. However, you may end up paying more amount for your solar system in this as compared with other options as it will be provided for a longer period.
5. Solar PPA
In Solar Power Purchase Agreements, the solar system will be installed for free by the installer but they will charge you a fixed amount for the power you use. The ownership, and onus of maintenance and repairing your rooftop solar system remains with the installer. It is like purchasing energy at lower rates than the grid. This arrangement works if you do not wish to stay permanently at your current place or store all the power produced.
Solar Leasing- An Alternative to Solar Loan
Except for PPAs, the user retains ownership of the solar system in every solar finance option. A solar lease is a hybrid of loans and PPAs. Here, the ownership is deferred until the repayment of the lease loan. It is also called rent-to-own solar as your solar system is supplied without paying any upfront cost. It is paid in predefined monthly instalments. You may absolutely go for this provided the interest rates are lower than other options. Also, you have to pay the entire amount at once if you are planning to move. So, it is only for those who have permanent homes.