The trap of "interest free" money in solar power

Hey, my name’s Stuart from IQ Solar and I want to talk to you about the appeal of interest-free loans for solar power, or I should say false appeal, because there’s really no such thing as a free lunch, somebody is always paying the interest. So my point is that when someone offers interest-free money for solar, the money is basically just hidden in the deal somewhere. So there’s a few companies that offer no interest ever or interest free and so forth. Typically instead of you paying the interest, it’s the supplier on our end that would pay a fee to the lender, so that amount is also not small. With one of the companies, it’s around 28% of the deal value that we would have to pay to that lender in order to be able to offer interest-free money to you.

So there is no such thing as a free lunch. Somebody is always paying, and it’s not always a great deal, the embedded interest rate within that is in the teens somewhere, it’s kind of credit card level cost of money. So what’s the alternative? Well, there’s a few. One, obviously, you get to buy it outright, in that case, you get all the benefit without worrying about any repayments, you could put it up against a… Or on your home loan and incur whatever the prevailing rate of interest is, a couple of percent for example. There’s a trap in there, and that is that if you don’t pay, you make extra repayments, you’ll end up just accumulating the debt for longer and longer, so the trick is to make extra repayments.

The third is, if you want to look at a lender for solar, there’s quite reasonable sources of money available, and the rate of interest that they’re charging is 5% or 7% per annum, so it’s quite an affordable cost of money, those products are also quite flexible, you can get them over a couple of years, five years, seven years, and if you decide you want to exit, pay it out early and just and be done with the loan. You can do that, and there’s typically no penalties. So there’s various things that we can offer you. The last option, if you want to have a comparison, is reasonably new, it’s what we call pay-as-you-go or pay-as-you-use solar. We install the solar at no upfront cost to you, and we simply charge you for the power that comes off the system.

So if that’s worth talking about, then let’s have a conversation, but the main purpose of this video is to sort of dispel the myth that no interest money is good. There is always a cost of that money, it is hidden, and it’s not small. So quite often we are asked, “Do you offer no interest money for solar?” And our answer is no. If you were going to do a loan, we’d rather put you in touch with a reputable lender that’s going to charge you some interest, 5% or 7% but has a really good product, and then we can be transparent about how it cost to you. We’re not trying to mark it up so that we can jam in that fee somewhere. So for us, we’re transparent about how we sell, it makes no difference to us if you pay for it outright or you go through a lender, we don’t have one price for a loan and one for cash. It’s just the one price. Anyway, I hope that sort of makes it clearer. If you do want to talk about how to not pay for solar, I would love to have that conversation with you. Thank you.