Personal finance provider Plenti has thrown its hat on the green energy circle to compete with the interest-free options offered by buy now, pay later companies.
Plenti has launched a new interest-free financing offer for households looking to purchase renewable energy technology, mainly solar panels and battery installations.
The consumer lender is already funding more than $ 100 million in renewable energy loans and added an additional $ 28.5 million in 2020 alone.
However, it previously offered a standard interest-bearing loan for such investments (comparison rate 6.50% p.a., 8.30% p.a.), while BNPL companies (buy now, pay later) were able to offer “no interest” options.
Plenti’s new product should help it compete with the various BNPL platforms offering interest-free financing for renewable energies, such as:
- Brighte: The 0% leading fintech for solar power and home improvement with more than $ 500 million funded to date.
- Hmmm: One of the largest BNPL players in Australia, which offers large credit limits up to $ 30,000 and sees a large number of solar and home energy purchases.
- Handypay: Although technically a personal lender, it offers 12-month interest-free loans for $ 5,000 of home improvement purchases (and cheaper going rates for green upgrades)
Major Bank Commonwealth Bank also joined last month, release of a new green loan at 0.99% pa for renewable home renovations worth up to $ 20,000.
With more than two million households now invested in solar power, Plenti has identified it as a key market opportunity, and previous research by Plenti shows that 50% of current solar users want to invest in more renewable energy to Their houses.
“The fact that so many green Australians want to invest even more in solar power is a huge advantage in times of economic uncertainty,” said Louis Edwards, renewable energy finance manager at Plenti.
“For me, this shows that more and more people are realizing the technological curve we are in, the benefits of new products like home batteries and the need to intervene early to invest in the energy future. from their house. “
According to Plenti CEO Daniel Foggo, it will aim to deliver “regulated product type standards to offer buy now, pay later”, following the news that the BNPL code of good practice would only apply self-regulation.
“We will do a credit check for every customer who takes [buy now, pay later] of us, ”Mr. Foggo told the Australian Financial Review.
“It’s a realization that this is a permanent part of our financial landscape and a relevant form of financing that consumers will choose. “
According to a survey of Plenti customers, 99% of homeowners were happy with their green energy purchases, and the average monthly savings would be $ 175 per month.
The cost of installing items such as solar panels is generally high, often costing between $ 2,500 and $ 12,000 up front depending on the size.
Monthly savings over time are expected to exceed the initial installation cost.
“Homeowners were frustrated with the price barrier to installing solar power, while tenants felt it was not an option at all for them. Increasing the accessibility of these technologies was seen as a key method for reducing costs in the future, ”said Energy Consumers Australia (ECA).
See also: Energy saving tips for your home
How does Plenti’s interest-free loan work?
According to Plenti, this loan will work in much the same way a standard personal loan does not, with regular repayments made over a period of time, with no additional interest.
The loan will be available up to $ 35,000 before interest charges apply, and has a term of three to six years.
Under its old green loan interest rate, it would cost $ 3,618 in interest over three years and over $ 6,350 over six years.
But with 0% interest, the only additional charges would be the fees.
The product comes with a monthly fee of $ 5.99, an arrears fee of $ 10 per month, and a direct debit denial fee of $ 25.
In the absence of a set-up or early termination fee, the only regular fee would be the monthly fee.
Over a six-year interest-free period, that $ 35,000 would end up costing $ 432 more in fees, which is comparatively much cheaper.
How do these fees compare to other inexpensive, no-interest options?
Brighte, which says it finances one in 14 household solar installations, allows customers to borrow $ 30,000 and repay it over six months to five years.
Brighte charges $ 1.50 weekly maintenance fees and late fees of $ 4.99, capped at $ 49.90 per year (10 missed payments).
Humm’s “big things” payment plan for purchases up to $ 30,000 charges a monthly fee of $ 8, a set-up fee of $ 35- $ 90, and a late fee of $ 6, so this one. this is a little more expensive than the others.
Since Handypay only offers interest-free repayments for the first $ 5,000, this loan would also be more expensive in most cases, before you even factor in a one-time upfront fee of $ 250 and a late fee of $ 35.
Savings.com.au search shows average upfront fees for personal loans is around $ 270, while the average monthly fee is around $ 2.
Photo by Moritz Kindler on Unsplash