Green loans for an energy-efficient and sustainable future
Green loans help to support your future investments while also helping the environment. Find out about green loan principles and green loan options that can benefit you in South Africa.
What are green loans?
A green loan is a specialised loan that’s used to completely or partly finance and refinance green projects. Green projects are those that benefit the environment and the climate. Therefore, green loans can be used to finance many environmentally positive projects for businesses, households and individuals:
- Waste recycling and management.
- Using cleaner and more efficient sources of energy.
- Clean transportation.
- Green technology.
- Green buildings.
What are green loan principles (GLP)?
Here are four principles that help to explain the difference between green financing and other types of loan instruments:
Use of proceeds
The funds from a green loan should only be used for eligible Green Projects and related expenses that include research and development. The project must have clearly defined environmental benefits. The borrower must assess these benefits, and if it’s feasible, the borrower should also quantify, measure, and report these benefits.
Process for project evaluation and selection
The borrower must outline their environmental sustainability objectives along with the process they have used to decide to determine if the project is eligible.
Management of proceeds
The borrower must use the funds from a green loan transparently and in a way that promotes the integrity of the loan. The funds must, therefore, be placed in a dedicated account or an account where the borrower can easily track the transactions.
Reporting
Borrowers should collect and maintain updated information on the use of the green loan, and this information is to be reviewed annually until the funds are fully utilised. The reports should contain a list of the Green Projects receiving funds and a short description of the projects. They should also detail the allocation of funds and the expected impact for each project.
What is a green mortgage?
This is money you specifically borrow to purchase a green or energy-efficient house. A green mortgage has favourable terms as long as you can provide sufficient proof that the place you’re buying meets the prescribed environmental standards. You can also use green financing to renovate an old home so it can be certified green. In exchange, you get to borrow more at a lower interest rate.
What is a green personal loan?
Turning your home green saves energy, money, and the environment. A green personal loan can help you make the following energy-efficient changes:
- Install solar panels;
- LED lighting;
- Green landscaping;
- Home insulation improvements;
- Energy-efficient home electronics and appliances;
- Window and door replacement;
- Installing cool roofing;
- Energy-efficient stoves; and
- Water-saving systems.
Find the best green loans and solar loans in South Africa
There’s a wide variety of projects that are eligible for green finance. CompareLoans can help you find the green loan, personal loan, or solar loan you need to save money and streamline the environmental performance of your home or business. Before you get started on your application here are a few tips to help you compare green loans:
- Interest rates. Your interest rate can be variable or fixed but always find the most competitive offer available for your credit score.
- APR. The Annual Percentage Rate is a good comparison rate to use since it includes the interest rate and other loan charges and fees.
- Loan amount. If you already have a contractor’s or supplier’s quote, find out if the loan amount you need is within the minimum and maximum limits set out by the lender.
- Collateral. Find out if the loan is secured or unsecured and choose a loan that suits your situation or preferences.
- Requirements. South African lenders have slightly different requirements, so make sure you’re eligible before applying. General requirements include a valid South African ID, minimum of 18 years, and proof of residence.
- Monthly repayments. Our green loan repayment calculator helps you find affordable instalments that align with your budget. Make use of the sliding tools to enter your loan amount and term. Next, click calculate and check for the results in our comparison tables above.
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