What do you mean there is no such thing as interest free solar?
An insight into interest free solar loans and why you should run for the hills.
5 words – THERE IS NO SUCH THING!
We can wrap this article up pretty quickly by explaining how the 0% interest system works…
The finance company providing the ‘interest free loan’ to the consumer charges the solar company a fee depending on the length of the loan. That fee, believe it or not isn’t absorbed by the solar company, it’s passed onto the consumer.
For example –
A solar company quotes a client $10,000 for a solar panel installation. Of that $10,000 the finance company charges the solar company up to 25% (4 year loan term). That’s $2500 in fees! Do you really think the solar company will cop the full brunt of that cost? Unfortunately not, it’s passed onto the consumer resulting in a $10,000 system costing $12,500.
On top of the ‘interest free loan’ fees passed onto the consumer, they hit you with this!
- $3.50 monthly Revolving Credit Account fees (even after you have paid off the loan – until you close the account)
- $2.95 Fortnightly Payment processing fees
- $35 to $90 customer establishment fee (depending on the deal the retailer gets)
- $15 Late payment fees
- $15 Change of details fees (for changing any of the details around your arrangement, such as payment dates etc.)
- $30 Collection fees (on top of a late payment fee!)
- $22 Repeat purchase fees. (Consider it a customer loyalty fee).
Up to 40 months
There is an honest and ethical way to offer finance..
It’s called a fixed interest rate with a company who is regulated and governed by the “National Consumer Credit Protection Act.”
Australia has legislation in place to protect consumers who borrow money. It’s called the “National Consumer Credit Protection Act.” However, because of the interest free loophole, some finance companies like Certegy are not regulated by the NCCP Act.
Who do we trust? (for now)
After countless meetings and phone calls with various finance companies we have decided to partner with Brighte. Brighte have introduced their ‘Green Loan’ at a fixed rate of 7.99% with 2-7 year terms. Brighte is backed by one of the big four – NAB and we feel confident in offering Brighte’s Green Loan to our clients.
Brighte Green Loan Fees
- 7.99% fixed interest rate
- No upfront/setup cost
- No account management fees
- There are no fees and charges for making extra payments or paying your account off early.
- $4.99 late payment fee
The end all example to finish any argument between a ‘fixed green loan’ and an ‘interest free loan’. Unfortunately the 0% interest loan is simply a selling tool for what I consider unethical solar retailers.
Loan amount – $10,000
Loan term – 3 years
0% interest loan fee passed onto the client – $2500
7.99% fixed interest loan over 3 years – $1310
Total amount paid with 0% interest loan option – $12,500
Total amount paid with 7.99% fixed interest loan option – $11,310.
You pay $1200 more with 0% interest loans!
THERE IS NO SUCH THING AS INTEREST FREE SOLAR!
This article should not be considered financial advice. I’m just a sparkie. Contact the lenders to get accurate and up to date figures.
Article by Jye van Waelsden – Managing Director