How Do Solar Loans Work? What to Know Before You Borrow

The short answer: A solar loan lets you spread the cost over time instead of paying upfront. It can make sense if the repayments are close to what you save on power, but the rate and fees decide whether it is a good deal or an expensive one.

The usual types

• Green or solar loans from banks and lenders, often with lower rates than a standard personal loan.
• Redraw or mortgage top-ups, which are cheap per year but can stretch the cost over decades.
• Personal loans, quicker but usually pricier.
• Interest-free or buy-now-pay-later deals, which can be fine if you repay on time and awful if you do not.

The maths that matters

Add up the full cost: interest, establishment fees, monthly fees, and any early payout penalty. Then compare the repayment with the power bill you expect to save. If the loan costs less per month than the bill it removes, you are cash-flow positive from day one. If not, you are paying to feel good about the roof. Our savings explainer shows how to work out your three numbers.

Questions to ask any lender

• What is the comparison rate, not just the headline rate?
• Are there establishment or monthly fees?
• Can I pay it off early without a penalty?
• Is the loan secured against anything?

Does it differ by state?

Government finance support changes often and varies. At the time of writing (November 2026), some states have offered low-interest loan or battery schemes, for example in WA and NSW, but eligibility, caps and dates move around. Check the current state program page before you plan around one.

A word of caution

We are not financial advisers, and nothing here is personal financial advice. Read the contract, ask silly questions, and walk away from anyone who rushes you.

Not sure what system size you would be financing? Start with what size solar system you need and upload your bill.

General information only, current at November 2026. Prices, rebates and tariffs change, so check current terms before you buy.