Green loans made simple

A green loan is a type of unsecured loan that can be used to fund the purchase and installation of approved clean energy products, helping you lower your power bills while supporting the health of the planet.

RateSetter green loans can provide a lower interest rate than traditional personal loans or credit cards, and with terms of up to 7 years, offer affordable repayments to help more homeowners access the benefits of clean energy technology.

Green loans can only be used to fund the purchase and installation of energy efficient products. They include:

• Solar panels and home batteries
• Solar pool heating units
• Energy-efficient lighting
• Energy-efficient air conditioning units
• Hybrid low emission cars
• Air source heat pumps
• Power factor correction
• Variable speed and frequency drives

It’s important to note that not all products in the above categories are eligible for a green loan (or government subsidy). Renewable energy products must meet strict standards of efficiency and performance. To find out if a specific product is eligible, it’s best to consult your green loan provider. If your product does not qualify you may still be able to fund your purchase by applying for one of our low rate personal loans.

Green loan providers usually work with an approved list of product suppliers, installers, and other contractors. Ordinarily, the approved contractor will carry out work on your property and then submit their invoices directly to the green loan provider. This means that you can avoid borrowing any more than you need. Instead, you repay only the cost of the product itself plus interest. Green loans tend to have terms that are comparable to those of personal loans: for example with RateSetter, you can pay your green loan back over three to seven years.

We’ll pay funds into your nominated bank account on the next business day following your loan acceptance. This gives you the flexibility to manage and pay for your green costs any way you like.

Green loans generally have three components that that affect the total cost over the life of the loan:

• the interest rate (this may be fixed or variable)
• a one-time establishment fee
• ongoing fees (such as account maintenance fees, late payment fees, and other charges)

These costs are often combined to create a comparison rate that represents the total price of a loan. This allows you to compare different green loans to find the one that best suits your needs.

For an overview of fees and charges (including interest rates) associated with RateSetter’s green loans, see the table below:

*Comparison rate for 3 year loans are on an unsecured renewable energy loan of $10,000 over a 36 month term. Comparison rates for 4, 5, 6 and 7 year loans are based on an unsecured renewable energy loan of $30,0000 over a 60 month term. Comparison rates shown assume customer with an excellent credit history. Rates current as at 9pm, 28 February 2020. Warning: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates, Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

RateSetter provides secured and unsecured green loans to Australian-residents. Save time before applying by making sure:

• You are aged 21 or over
• You are an Australian citizen or permanent resident
• You have a regular source of income that you can demonstrate
• You have a good credit history

To see if you may qualify for a RateSetter green loan, you can get a RateEstimate, it only takes 1 minute and won’t affect your credit score. If you request a RateEstimate, we will ask you a few questions so we can calculate an initial estimate of your borrowing potential, and the rates, fees and charges that may apply to your loan.

In making a final decision, we consider a number of factors, including your credit file as provided to us by Equifax or Illion, our credit bureau partners. If you would like more information regarding your credit file, you should contact Equifax and Illion directly.

To apply for a RateSetter green loan, you will need to complete our identity verification process successfully. To complete identity verification you will need to provide one or more of the following documents:

• Australian State or Territory-issued drivers licence
• Australian or foreign passport
• Address verification document such as a utility bill or tenancy agreement

These details can either be entered on our website during the application process and automatically verified online or you can upload as part of the application process.

When assessing your application, we are looking for evidence of how suitable a loan is to your current circumstances. Among other things, we’ll assess your:

• Employment stability;
• Income;
• Expenses;
• Repayment history;
• Credit bureau information; and
• Other details you communicate to us.

You will also be asked to verify your income and expenses, and may be asked to provide supporting documentation such as bank statement information or payslips. The documents you will need to provide will be displayed to you during the application process.

You may have heard the old saying: if something sounds too good to be true, then… well, it probably is too good to be true. Unfortunately, this is often the case with interest-free loans. It may seem like you’re getting a great deal, but there’s a good chance that you’ll end up paying more than you would have with a conventional loan (or an outright purchase).

So, if you’re hoping to invest in a renewable energy product, such as solar panels or a solar heating system, it’s a good idea to be wary of interest-free offers. Here are five reasons you should consider a green loan instead.

Interest-free finance is not really free

No finance is really free. So, if a loan is advertised as interest-free, the lender is actually likely to be recouping their costs of providing you with finance by charging one or more of the following types of fees:

• Merchant fees charged to vendors (i.e. the business that sells the product or service purchased with the loan)
• Account fees charged to customers (this may include an establishment fee, monthly fees, account management fees, and statement fees)

You could end up paying a higher price with interest-free finance

To cover the costs of hefty merchant fees, vendors may increase the ‘interest-free’ price you pay for their goods and services. In other words, the amount you would usually pay as interest is simply added to the cost of the purchase itself. For example, the cash price for a solar energy system might be $5,000. However, if you apply for an interest-free loan, the price could rise to $6,000. You might not even be aware that this has happened.

Your loan is unlikely to be interest-free indefinitely

Making the minimum monthly repayments on your interest-free finance mightn’t be enough to clear your debt by the end of the interest-free period. This may leave you responsible for an outstanding amount that could generate interest rates as high as 29%, with heavy penalties for any late payments.

You may not be protected by the National Consumer Credit Act if you choose interest-free finance

The National Credit Code doesn’t apply to interest-free loans, which means that you’re not entitled to the same disclosure documents (including a full breakdown of fees and charges) as you would receive with a regular financial product. You may also be unable to access dispute resolution services such as those offered by the Australian Financial Complaints Authority (AFCA). By contrast, green loan applicants can seek recourse through various channels because loan providers must abide by the National Credit Code.

A green loan offers clear terms and competitive interest

With a green loan, you know exactly what you’re getting: a competitive interest rate with a consistent monthly repayment schedule that makes budgeting a cinch. There are no hidden charges and your interest rate won’t abruptly double without warning. Because you can access the cash price of your chosen renewable energy product, and needn’t worry about hefty merchant fees, you can even save money by choosing a green loan over interest-free finance.

It’s easy to pair green loans with government subsidies

The government has implemented a variety of schemes to encourage more Australians to invest in sustainable technologies for their homes. Often, the associated subsidies are linked to green loans. For example, the Clean Energy Finance Corporation has paired with RateSetter to administer its South Australian Home Battery Scheme. Through RateSetter, the subsidy is paid directly to the installer and you can apply for affordable finance at the same time.