How to finance your solar investment

Solar panels are an expensive investment. Fortunately there are plenty of ways to pay for solar without breaking the bank.

A typical solar system can set you back up to $15,000 – even more if you want to install a solar battery as well. While some people can afford to pay for solar upfront, many of us will look to a range of finance options for assistance. In this article, Canstar Blue looks at some of the best ways to finance your solar panels, including:

  • Green loans
  • Interest free solar loans
  • Personal loans
  • Adding solar to your mortgage
  • Solar leasing
  • Solar power purchase arrangements

Green Loans

Green loans are unsecured personal loans offered by certain institutions to customers purchasing environmentally friendly products like solar panels, batteries and hot water systems. Green loans generally have lower interest rates and fewer fees compared to personal loans, but check this in the fine print.

If you can’t afford to pay cash up front, green loans are widely considered the next best option. If there is a downside to Green loans, it’s that there are usually some pretty stringent eligibility requirements. Some institutions will only finance approved solar products and will only approve loans to applicants with a good credit score.

Institutions offering Green loans include:

  • Hunter United Credit Union
  • Bendigo Bank
  • Community First Credit Union
  • RateSetter
  • Nova Credit Union
Pros Cons
  • Low interest loan
  • You own the solar system and can start saving
  • Some loans have long term options and waive certain fees
  • Only offered by a handful of institutes
  • Customers must have a good credit score to be eligible

Most ideal for: Pretty much anyone with a good credit score.

Interest Free Solar Loans

Many solar suppliers say something along the lines of “Get solar today for no upfront cost and no interest on repayments”. It sounds too good to be true, and that’s because it usually is. Interest free loans might not include interest, but to cover the finance company’s merchant fees, the supplier or installer will typically increase the quoted system price by around 15% to 25%. So while you’re not paying interest, interest free loans will often result in customers paying considerably more.

No interest solar financers tend to have much higher approval ratings compared to average lenders. If you have poor credit, you’re probably ineligible for a low cost green or personal loan and an interest free loan could be your only option.

Pros Cons
  • No interest
  • You take ownership of the solar system and can start saving on power
  • Makes solar accessible for customers with poor credit
  • Interest free loans often work out more expensive
  • Often shorter terms than green loans, meaning higher monthly repayments

Most ideal for: Interest free solar loans should generally be avoided unless you have poor credit and can afford the higher monthly repayments.

Personal Loans

Personal loans are a safe, middle of the road option to finance a solar system. If you shop around, you may be able to find a reasonable personal loan rate and some lenders may factor in the purpose of your loan to give you a better deal. If you’re a bit of an optimist, the higher interest rate could incentivise you to pay off your loan faster, potentially coming out the other end better off than if you took out a green loan. It’s also easier to receive approval for a personal loan compared to a green loan.

Unlike some green loans which require you to have sourced a solar system before the loan is paid out, personal loans are pre-approved, meaning you have the cash-in-hand to negotiate a better price when you buy the solar panels. To compare personal loans, visit

Pros Cons
  • Flexible. Personal loans are not limited to solar items
  • Can work out cheaper than a  Green loan if it’s paid off quickly
  • Gives customers a stronger bargaining position when purchasing solar
  • Interest rate generally higher than Green loan
  • Finding a good personal loan can be tricky
  • Requires a decent credit score

Most ideal for: Customers with reasonable credit scores and are financially savvy enough to find a value personal loan. They may also also a great option for those dealing with solar suppliers that will negotiate down their price for upfront payment.

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Add solar to your mortgage

Given the current low mortgage rate of about 4-5%, borrowing more against your home to pay for a solar system could be a perfectly sensible way to finance solar panels. Mortgages obviously take a long time to pay off however, and adding more debt could leave you paying a lot more for solar in over the life of the mortgage. Paying off solar this way is therefore a bit risky and you shouldn’t do it unless you have a comfortable understanding of your finances or you’ve received independent financial advice

 Pros Cons
  • Very low interest
  • You take ownership of the solar system and can start saving on power
  • Consolidates debt
  • If you’re slow to pay off the mortgage, you may end up paying more for solar long term.
  • Home loan interest rates often only marginally better than a green loan

Most ideal for: Homeowners with sound financial knowledge and discipline to repay the mortgage as quickly as possible.

Solar Leasing

Solar leasing – sometimes called ‘rent-to-own solar’ – is an agreement whereby your solar system is supplied and installed with no upfront costs. It is then paid off in fixed monthly repayments. The key difference between this and a loan is that when you lease your solar panels, you don’t actually own them until they’re fully paid off. You will however be required to pay the outstanding balance and take ownership of your solar if you decide to move house as panels can’t easily be removed and reused.

Solar leasing is often marketed as having low monthly repayments which are less than the savings you’d make with solar. It’s an appealing proposition, but customers should be wary of the interest rate. Solar leases sometimes have comparably high interest rates which can hurt your hip-pocket long term.

Pros Cons
  • No upfront cost
  • Low monthly payments
  • Since you don’t own the solar, you’re generally not responsible for its maintenance
  • Start saving with solar immediately
  • You don’t own your solar
  • Must pay outstanding balance of solar if you move house
  • Often higher interest rates than solar loans.
  • Lower lifetime savings


 Most ideal for: Large, commercial solar systems where the savings will easily outweigh the accrued interest costs over the life of the system.

Solar power purchase arrangements

Under a solar power purchase arrangement (solar PPA), an operator installs panels on your roof for free. In return, the operator retains ownership of the panels and you agree to buy the solar power produced from these panels at a rate less than what you’d pay from the grid.  For example, an operator could charge you 18c/kWh for the solar power while the grid price for electricity could be 28c/kWh.

Solar PPA’s generated a lot of excitement when they first popped up, however a number of critical issues with this setup have been found since then. The biggest issue is that PPA’s only work if you can use or store all the solar power generated by the panels. If solar power is not used immediately then it’s fed into the electricity grid in exchange for a feed-in-tariff. If you’ve paid 18c/kWh for that solar power, but receive a lower feed-in tariff, say 10c/kWh, then you’re essentially 8c/kWh out of pocket for nothing.

Pros Cons
  • No upfront cost
  • No need to make traditional repayments.
  • Operator will maintain the panels
  • Potential to start saving immediately
  • Customers only receive some of the benefit of solar
  • You don’t own the solar panels


 Most ideal for: Large, commercial solar systems where the savings will easily outweigh the accrued interest costs over the life of the system.

Government Solar Loans

Saving money on solar energy

The Australian Government’s no interest Green Loan program was closed to new applicants back in 2010. Although there are some solar rebates, there are currently no government solar loans available to residential or small business customers. As power prices begin to rise, some state governments have considered introducing their own green loans program. The Queensland government for example has announced it will introduce $40 million in no interest loans for Queenslanders who install solar panels or batteries, though there are no details on this just yet.

What’s the best way to finance solar?

The best way to finance solar will depend on your personal situation and it is ultimately up to you to decide what’s best for your needs. Personal loans are a safe bet, but consider a low-interest green loan if you can. While solar can be a great investment, its savings aren’t guaranteed. So if you have a poor credit score, it might not worth risking a bad finance deal to get solar. For more information on solar, including Canstar Blue’s solar company satisfaction ratings, check out the link below.

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