Solar Payment Plans and Financing Options for Your System
Investing in solar is one of the best ways to take control of your energy bills and reduce reliance on the grid. But let's be honest-solar panel systems aren't cheap. Solar can save you money in the long run, but the upfront cost can be overwhelming.
The good news? You don't have to pay for everything at once. Several financing options and solar payment plans are available to help you switch to solar power. In this guide, we'll walk through the five common ways to finance a solar system so you can find the best fit for your budget and start saving on energy sooner.
Key Takeaways:
Multiple Solar Financing Options Are Available – Homeowners can choose from various solar payment plans, including upfront purchases, solar loans, leases, and power purchase agreements (PPAs). Each option has different benefits and cost structures.
Owning vs. Leasing Affects Long-Term Savings – Buying a system outright or through a loan provides the best long-term savings and energy independence, while leasing or PPAs offer low upfront costs but limit ownership benefits.
Government Incentives Can Reduce Costs – Programs like rebates and solar incentives can significantly lower the cost of installing a system. These programs enable options even more affordable.
Choosing the Right Plan Depends on Your Budget The best solar payment plan and financing options depend on individual financial situations, energy needs, and long-term goals. Homeowners should compare options to find the best fit.
Why Do People Choose to Finance Their Solar System?
Solar financing greatly improves the accessibility of solar and clean energy systems for many households. Solar is a great way to see a reduction in your electricity bill, helping you to preserve your savings for something more exciting than heating your home, washing clothes, keeping food cold, etc. Here are a few reasons why green loans and other solar financing options are becoming more popular:
Start Generating Energy Now: We understand that solar energy can be a considerable financial investment and that this is not always feasible for everybody in their situation. However, those homes are often the ones that could benefit the most from personalised energy management. With a solar or green loan, the burden of an upfront payment is eliminated, yet you will start seeing solar benefits immediately. This method of financing allows you to pay the system off over time as the cumulative savings increase, helping to offset this.
Save Your Money for When You Need it Most: From time to time in our lives things happen and stuff goes wrong, in these moments we often find ourselves in need of a financial safety net to deal with these issues. If you're looking to install solar, financing your system allows you to do so while still preserving emergency money, allowing you peace of mind.
Pay Less, Power More: Delaying installation of your clean energy system only prolongs the time spent paying for expensive grid power. Solar financing allows households to minimise this delay and start saving immediately. The same goes for government incentives and rebates - there are plenty of attractive government programs for solar homes at the moment, but they don’t last forever. The sooner you install it, the greater the benefit you will receive.
Solar Green Loans or Interest-Free Payment Plan?
Solar Green Loans
A solar green loan is a personal loan specifically designed for homeowners who want to finance their solar panel installation. Solar green loans typically have a lower interest rate than traditional personal loans, making them an attractive option for homeowners who want to save money on their energy bills.
One of the main advantages of a solar green loan is that it can be repaid over a longer period, making the repayments more manageable.
Additionally, a solar green loan allows you to access a lump sum of money upfront, which you can use to pay for the full cost of your solar panel installation, including any necessary upgrades or repairs.
This avenue of financing your system is designed with clean energy installations in mind, making, more often than not, for many solar homes the preferred choice.
Interest-Free Payment Plans
An interest-free payment plan, as the name suggests, allows homeowners to finance their solar panel installation without paying any interest. Instead, homeowners make repayments over an agreed period, usually 12, 24, or 36 months, with no interest charged on the amount borrowed.
The main advantage of an interest-free payment plan is that it allows homeowners to spread the cost of their solar panel installation over a longer period, making the repayments more manageable. Additionally, an interest-free payment plan can provide peace of mind as you know exactly how much you’ll pay each month and for how long.
The catch with interest-free is that the company you purchase the solar system from is charged a large fee for the interest-free payment plan. This is then passed on to the consumer. Typically, the additional fee for buying a solar system interest-free is around 20% of the purchase price. This is also why you will often be offered a ‘discount for cash’.
For example, when you purchase a system through an interest-free loan, the overall cost will be increased by around 20%; let’s look at how this would translate in the real world.
Say you buy a solar system that, when purchased outright, would cost around $10,000. If you choose to finance this system through an interest-free loan, the system may cost you around $12,000
Therefore:
CASH PRICE = $10,000
FINANCED PRICE = $12,000
When choosing between a solar green loan and an interest-free payment plan, it’s essential to consider your financial situation and energy needs. If you’re looking for an extended repayment period and can access a lump sum of money upfront, a solar green loan may be your better option.
On the other hand, an interest-free payment plan may be the way to go if you’re looking for a more straightforward and manageable repayment plan without dealing with banks and lengthy application forms.
Ultimately, it’s essential to do your research and consider your options carefully before deciding. A licensed and experienced solar installer can provide you with customised advice and help you understand the pros and cons of each financing option to ensure that you make the best choice for your needs.
| Feature | Solar Green Loan | Interest-Free Payment Plan |
|---|---|---|
| Interest Charged? | Yes, but low | No interest, but markup |
| Repayment Term | Longer (3-15 Years) | Shorter (1-3 Years) |
| Monthly Payments | Lower due to longer term | Higher due to shorter term |
| Approval Process | Credit check required | Easier, no credit check |
| Total Cost Over Time | Less than interest-free plans (if repaid early) | More due to 20% markup |
| Best For | Homeowners looking for lower monthly payments over time | Homeowners who want a quick, predictable repayment plan |
Let's say you want to install a $10,000 solar system and are still undecided about whether to take a solar green loan or an interest-free payment plan.
An interest-free payment plan typically involves an upfront fee that's passed on to the customer. For example:
Upfront Fee (20% additional cost): This is the cost the company adds for offering the interest-free plan.
Total Cost of the System: $10,000 + 20% = $12,000 (this is the price the customer pays).
Repayment Term: Let’s say 24 months.
So, your monthly repayment would be:
Total Amount: $12,000
Repayment Term: 24 months
Approximate Monthly Repayment: $500/month
Quick Example Comparison Table
| Financing Option | Total System Cost | Loan Term | Interest Rate | Monthly Repayment | Total Repayment (Over Term) |
|---|---|---|---|---|---|
| Interest-Free Payment Plan | $12,000 | 2 Years | 0% | $500 | $12,000 |
| Green Loan | $10,000 | 5 Years | 5% | $188.71 | $11,200 |
A green loan, on the other hand, typically has a lower interest rate compared to other loans. For instance:
Interest Rate: Around 4-6% (as an example, this can vary based on the lender and the loan terms).
Loan Term: Commonly 5-7 years.
Let’s say the rate is 5% and the loan term is 5 years.
Using an online loan calculator, you can calculate the monthly repayment for a loan with these details.
Principal Loan Amount: $10,000
Interest Rate: 5%
Loan Term: 5 years
To make our example more straightforward, let's assume no upfront fees or ongoing administration fees.
Approximate Monthly Repayment: $188.71 (just an example, can change with rates)
After 5 years, you will have paid the principal amount of $10,000 plus about $1,200 in interest.
Where to Find Solar Green Loans
CommBank Green Loan
CommBank customers with an eligible CommBank home loan or investment home loan can use the CommBank Green Loan to buy a 1KOMMA5° solar power system and battery storage at the property secured by their existing home loan.
The CommBank Green Loan is an ultra-low, secured fixed-rate loan with no establishment fee, monthly loan service fee or early repayment fee.
Check with your mortgage bank to see if they offer any ultra-low Green Loan products.
Plenti Green Loan
1KOMMA5° offers the option to pay for your solar system with a Plenti Green Loan.
We make financing your 1KOMMA5° installation trouble-free and easy. Once you decide to proceed with an installation, your 1KOMMA5° representative will help submit all of the documentation you need to get your loan approved.
Plenti Green Loans can be used to finance 1KOMMA5° systems up to $50,000 over a 3 - 15 year term (maximum 7 year term for solar only installations). Once you have received a referral from 1KOMMA5°, online approval usually occurs within 1-2 business days.
To be eligible to apply you must:
Be over 18 years old and an Australian resident or citizen
Own or be purchasing a home
Be employed, self-employed, a self-funded retiree; or is receiving the Government Age Pension
Have an Australian driver’s license, Medicare card or Passport
Community First Credit Union
Community First Credit Union offers a competitive green loan product which is one of many green loan options available in the market.
With no upfront deposit, easy monthly repayments and flexible loan terms of 1 - 10 years and a lower interest rate than most standard personal loan options, it can make financing your solar or battery installation more affordable.
Many customers these days are choosing to pay part of their installation upfront, and then finance the balance to keep their repayments even lower.
At 1KOMMA5° we allow you to choose your finance option so that you have the flexibilty to pick the loan product that makes the most sense for you.
There are a number of good, competitive Green Loan providers – ask us about the options available.
For more information, talk to the 1KOMMA5° team today on 1800 640 919.
Pros & Cons of Green Loans vs Interest-Free Payment Plans
| FACTOR | GREEN LOANS (PLENTI) | INTEREST-FREE PAYMENT PLANS |
|---|---|---|
| Loan Term | Longer Repayment Period | Shorter Repayment Period |
| Interest Rates | 9.49% p.a. | No Interest Rate |
| Monthly Fees | $8.99 | No Monthly Fees |
Other Methods of Paying for Your Solar
Households across Australia are facing rising energy costs, while solar power has never been so affordable. Installing solar panels can reduce or even eliminate your power bills, plus they can supply your home with clean renewable energy for decades.
But as the average system size continues to increase and more than half of installations now include battery storage, many people are now choosing to finance some, or all, of the system. Larger systems cost more money, but they can also save you many thousands of dollars year after year, making it an attractive and safe investment.
Thanks to the current low interest rates, it’s common for the monthly loan repayments to be less than the benefit of the system, often significantly, especially if you spread the payments out over several years.
Let’s have a look at the top 5 ways on how to pay for your solar panels with or without battery storage:
Borrowing Against Your Home
When looking at the various finance options available for solar power, borrowing against your house will typically have the lowest interest rate. Comparison rates are at record lows in Sydney, and from what people are saying, appear to be staying low for at least the next few years. Of course, there are a number of variables that will affect your ability to redraw money from your home loan, however, we have found that customers with a redraw facility have little to no problem financing a solar power system this way as long as everything else is in order.
Refinancing or drawing money from your mortgage can involve additional fees, but these will often be much less than other options – including low-interest green loans. This has proven to be a common way for our customers to finance their solar investment, and we suggest you talk with your bank to ensure that you have all the correct information.
At 1KOMMA5°, we choose to only pass on interest rates to those customers who wish to finance, which is why we opt for the Green Loan products offered by our finance partners. It keeps the system costs down for everyone – and makes the fees for financing more transparent.
Credit Cards and Personal Loans
A number of our customers choose to pay for part (or all) of their solar system with a credit card. Some credit cards offer interest-free periods of up to 12 months or even longer, giving you a chance to pay off the solar system over a period of time without incurring any additional costs.
1KOMMA5° accepts all major credit cards, and we pass on the transaction fee for using the card when paying for the balance of the system (not our initial deposit). This information is available to you in your quotation.
The other option is to take out a personal loan from a lending institution such as a bank or credit union. A brief look at any comparison website will show you that interest rates vary considerably and are dependent on your personal situation such as your credit history etc. Typically a full-doc loan will require a higher credit score but in return, you will get a lower interest rate.
The Good Ol' Fashioned Way
You can pay for a1KOMMA5° system fee-free using a bank transfer. Our banking details are provided in the quotation.
Make Solar Affordable for You!
Don’t let upfront costs stop you from enjoying the benefits of solar power. With flexible financing options, going solar is easier than you think.
Are you looking to upgrade your current system, add a battery for backup power, or install a brand-new solar setup? We make the process simple and hassle-free. Talk to our team today— we’ll help you find the best way to finance your solar system.
FAQ
Frequently Asked Questions about Solar Financing
What is the best way to finance a solar system?
The best way to finance a solar system depends on your financial situation and long-term goals. A solar green loan may be a good option if you want to own your system outright and maximise savings. If you prefer smaller, predictable payments with no interest, an interest-free payment plan could work for you.
Can Solar Loans Be Paid Off Early?
Yes, many solar green loans and personal loans like Plenti allow early repayment without penalties. You can pay the remaining balance ahead of schedule without incurring extra fees. Always check your loan agreement or consult your lender, as some loans may have early repayment conditions.
Is it cheaper to buy solar panels upfront or use a payment plan?
Paying upfront is usually the cheapest option because it avoids interest and additional fees. However, if an upfront purchase isn’t feasible, financing through a green loan or an interest-free payment plan allows you to fund your solar installation.
How do I qualify for a solar green loan?
Eligibility for a solar green varies by lender. Below are the basic qualifications most lenders require, but keep in mind that additional criteria may apply depending on the lender:
Be an Australian resident or citizen
Own or be purchasing a home
Have a steady income (employed, self-employed, or a self-funded retiree)
Pass a credit check (for most green loans)
Have an Australian driver’s license, Medicare card or Passport.
Your Roadmap to Cost-Effective Solar:
1KOMMA5° Blog
Need more information?
Head over to the 1KOMMA5° blog for more helpful tips and other important guides on everything solar, from inverters, panels and batteries to how to make the most of your investment for years to come.