Switching personal finance products to those with lower environmental footprints can save Australians up to $2,300 per year, but first they need to overcome the “stigma” that green products are more expensive.
That’s according to new analysis by comparison service Mozo, which ran the numbers on three common financial products and their green counterparts.
“Following the United Nations Climate Change Conference, where many Australian banks and insurers pledged to unite private finances against climate change, going green is sure to be top of mind for many Aussies,” Mozo spokesperson Tom Godfrey said.
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“When it comes to reducing your financial environmental footprint, many providers have introduced green options, designed to reward the eco-conscious consumer with competitive rates and added benefits.”
Mozo said that while there’s a stigma that green products are more expensive, its analysis of three personal finance products prove the opposite.
Home loans: Save $1,671 a year
A borrower with a $400,000 owner occupier loan paying principal and interest over 25 years could save $1,671 a year on average by going green.
That’s based on them changing from the average non-green variable rate of 3.11 per cent to Bank Australia’s 2.30 per cent Clean Energy Home Loan.
Over the life of the loan, that could be as much as $41,767.
“With the property sector contributing almost a quarter of Australia’s greenhouse gas emissions, it's no surprise that many Aussies want to invest in sustainable homes,” Godfrey said.
But not everyone is eligible for these loans: generally, your property needs to be rated 7 stars or more under the Nationwide House Energy Rating Scheme or have achieved a passive house certification.
Car loans: Save $323 a year
If you’re purchasing a low emission vehicle, taking out a green car loan rather than a traditional car loan could save as much as $323 in interest.
That’s based on a $10,000 principal and interest 5-year loan. If someone were to switch from the average 5.95 per cent rate to the Illawarra Credit Union’s variable 3.99 per cent Green Car Loan, Mozo assesses they could save $1,615 over five years.
Personal loans: Save $303 a year
“From solar panels to water tanks, giving your home an eco-upgrade can make a serious dent in your hip-pocket,” Godfrey said.
“If you need a loan to afford your home renovation, taking advantage of a green personal loan could see you bank some serious savings.”
It found that swapping from a loan with the average 9.53 per cent variable rate to the Community First Credit Union’s 3.99 per cent Green Loan would save borrowers up to $303 a year, or $910 over a 3-year period.