Solar finance and loan options
Financing your solar system with a loan can be a viable option if you are wishing to reduce or eliminate the upfront purchase costs associated with going solar. You will pay a little extra in interest, but with fast paybacks on solar systems, it may allow you to get solar power.
If you live in Victoria, you may also be able to get an interest-free loan as part of the Victorian solar rebate scheme.
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Consider the added cost of finance
A solar loan will add cost to your purchase price in the form of interest and any loan application fees. You will pay interest on the loan at current market rates. Your finance provider may also charge you an application fee for setting up the finance. Both of these costs can affect the overall financial viability and payback period of your solar system.
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Benefits of solar finance
Solar finance benefits:
- No upfront cost
- Savings can outweigh costs
By taking out a solar loan, or adding the purchase cost of solar to your mortgage, you eliminate the financial hurdle of paying for your solar system in one hit. This is often a major deterrent for potential solar customers. Instead, you will pay off your solar system over time by making monthly repayments. Tailored solar, or green loans, range in terms of anywhere from between 3 and 10 years.
Savings can outweigh finance costs
The other major benefit of financing is that you can enjoy savings on your power bill immediately, but pay off the purchase over time. You may be fortunate to be in a position where your solar power savings outweigh your loan repayments. So just by installing solar and taking out a loan your hip pocket benefits immediately!
Your solar finance options
There are several ways that you can finance the purchase of a solar power system:
- 1Add to your mortgage
- 2Solar leasing
- 3Tailored solar loan
Add to your mortgage
Increasing your mortgage is likely to be the most cost-effective way to finance your solar investment. If you increase the amount you owe on your home, you’ll pay the standard home loan rate, because your property secures your loan.
Solar leasing is another form of finance. The major difference between leasing and finance is that when you take out a lease, you do not have ownership of your solar panels. We cover solar leasing options in-depth here.
Specific solar loan
With a special solar loan, the cost of finance may be slightly more expensive, as you may have a higher interest rate. However, at current market rates, the difference in interest rates is almost negligible.
An advantage of solar loans is that they are far easier to get approval for, and you are likely to pay it off a whole lot sooner.
If you live in Victoria, we recommend applying for an interest-free loan through Solar Victoria.