If you’re researching how to finance home energy efficiency improvements, green loans — for things like solar or other eco-friendly upgrades — may allow you to spread costs over several years.
You may also get a lower interest rate with a green-specific loan than you’d get with a general personal loan. Here are our selections for the six best green loans available nationwide.
- Best for longer loan terms: Clean Energy Credit Union
- Best for quick loan disbursement: LightStream
- Best for borrowers that need co-signers: LendingClub
- Best for solar panel installation: ProjectScout
- Best for large loan amounts: SoFi
- Best for less-than-perfect credit: Upstart
- What you should know about green loans
- How we picked these loans
Best for longer loan terms: Clean Energy Credit Union
Why the Clean Energy Credit Union stands out: The Clean Energy Credit Union offers green loans for projects that improve energy efficiency, such as installing geothermal heat pump systems, putting in solar panels, replacing insulation or purchasing an updated energy-efficient HVAC system. Depending on the type of project you’re planning, you can have up to 20 years to repay your debt, giving you a smaller monthly payment.
- Loan types: Clean Energy Credit Union gives you the option to apply for a secured loan, using your savings or CD account as collateral.
- Loan amounts: The maximum amount you can borrow depends on what you want to use the loan for. Clean Energy Credit Union’s loan amounts typically range from $3,000 to $90,000.
- Membership eligibility: To qualify for a loan from a credit union, you must be a member. To join Clean Energy Credit Union, you must belong to one of its partner organizations. Some of those organizations have open memberships that you can join for as little as $10.
- Loan uses: Loans may only be used for eligible green projects and services. Other home improvement projects don’t qualify for Clean Energy Credit Union loans.
Best for quick loan disbursement: LightStream
Why LightStream stands out: If you have a project that you need to pay for right away, LightStream might be a good option because you can receive your money as soon as the same day you apply. Some personal loan lenders take several days to disburse your funds after approving your application.
- Loan amounts: With LightStream, you can borrow up to $100,000.
- Loan terms: LightStream’s loan terms can be as long as 12 years for home improvement, solar, or energy efficiency projects.
- Autopay discount: LightStream offers a 0.5% autopay discount, but you must apply for this before your loan is funded.
- Fees: LightStream doesn’t charge origination or late fees, nor does it charge prepayment penalties.
Read our full review of LightStream personal loans to learn more.
Best for borrowers that need co-signers: LendingClub
Why LendingClub stands out: LendingClub lets you apply with a co-signer, so if you don’t have great credit and want to increase your odds of qualifying for a loan and getting a more competitive interest rate, you might want to consider this lender.
- Loan amounts: With Lending Club, you may borrow up to $40,000 with a home improvement loan for things like solar, water efficiency upgrades and energy-efficient doors or windows.
- Loan terms: You can choose a loan term of 36 or 60 months.
- Fees: LendingClub charges an origination fee — it’s 3% to 6% of your loan amount, and it’s deducted from your funds when it’s disbursed.
- Interest rates: LendingClub’s offers its lowest interest rates to borrowers with excellent credit. Most borrowers will likely qualify for a double-digit interest rate.
Read our full review of LendingClub personal loans to learn more.
Best for solar panel installation: ProjectScout
Why ProjectScout stands out: ProjectScout, operated by Sunlight Financial, advertises itself as a “one-stop” option for people who want to go solar. The company offers to connect you to financing and contractors for solar system installation. These green loans are available in amounts up to $100,000.
- Loan terms: With ProjectScout, loan terms extend up to 20 years.
- APRs: Rates can be as low as 0.99%
- Network: Project Scout has a network of more than 700 “trusted solar installer” contractors. You can enter your contact information to find a solar installer near you that participates in its financing program.
How much does it cost to install a solar electric system?
A residential solar system may cost about the same as buying a new midsize car. Your cost depends on several factors, including the size of the system you need, your location, labor costs and local permitting costs. You may be able to reduce the total price if you’re eligible for federal or state tax credits, deductions or incentive programs.
Best for large loan amounts: SoFi
Why SoFi stands out: Sofi doesn’t market any loans specifically for green projects — but its home improvement loans come in amounts up to $100,000. And if you have multiple renovations planned, such as installing new windows and purchasing energy-efficient appliances, you may need a pretty big loan. Some lenders have caps of $35,000 or less.
- Loan amounts: SoFi offers loans starting from $5,000 to $100,000.
- Loan terms: You can choose a term between two and seven years.
- Prequalification: You can get a rate quote from SoFi without a hard credit inquiry.
- No fees: SoFi doesn’t charge origination fees, late fees or prepayment penalties.
- Co-applicants: If you want to improve your chances of getting a loan or qualifying for a lower interest rate, you can apply for a SoFi loan with a co-applicant who’s jointly responsible for the loan. Your co-applicant must live at the same address as you to be allowed to sign the loan agreement.
Read our full review of SoFi personal loans to learn more.
Best for less-than-perfect credit: Upstart
Why Upstart stands out: If your credit isn’t in the good to excellent range, (which generally means scores between 670 and 850, according to the credit bureau Equifax), qualifying for a loan may be difficult. With Upstart, borrowers can apply for a home improvement loan (for work including green-energy-type upgrades) using alternative loan approval guidelines.
- Loan amounts: With Upstart, you can borrow $1,000 to $50,000 (depending on the state) for home improvement projects.
- Loan terms: When you take out a loan from Upstart, you can choose a loan term of three or five years.
- Prequalification: You can check your rates for green loans without affecting your credit scores. Just remember, prequalification is an estimate of terms — it doesn’t guarantee your rate or approval. Your final loan approval and terms may be different after you complete the full application process.
- Fees: Before applying for a loan, be aware that Upstart may charge origination fees (a percentage of the loan amount, generally under 10%) and Upstart will deduct the fee from the loan proceeds before disbursing the money to you.
- Disbursement: Most borrowers will receive their money quickly after approval. According to Upstart, 99% of those approved get their funds just one business day after accepting their loans’ terms.
Read our review of Upstart personal loans to learn more.
What you should know about green loans
Improving your home’s energy efficiency may help you use up to 20% to 30% less water or energy and increase your energy savings, but there are some considerations to remember.
There may be tax credits offered in a given tax year as incentives for energy-efficient improvements, but these may only offset a portion of your cost.
For example, in tax year 2020, the federal government offered a residential energy tax credit that gives a taxpayers credit worth up to 26% of the cost of approved qualifying expenses (such as installing solar panels). If you qualify for the credit, it may reduce how much you owe in federal income taxes — but you’ll need to consult the current tax year’s rules (published by the IRS) to learn what’s possible.
Alternatives to green loans
You could consider a home equity loan, home equity line of credit or cash-out refinance loan to finance green projects. But take note: There’s risk in secured-borrowing options – because you use your property as collateral, you could lose your home if you default.
Interest rates and terms vary
Depending on the lender, you could borrow up to $100,000 and have up to 20 years to repay a loan. Before applying, keep the following things in mind:
- Credit checks: When you apply for any personal loan, including green loans, lenders will check your credit. When the lender conducts a hard credit inquiry, it can affect your credit scores.
- Interest rates may be high: The lowest rates typically go to borrowers with excellent credit. If your credit isn’t great, your interest rate may be much higher. Some lenders offer interest rates in the double digits.
- Not all lenders offer long loan terms: While some lenders offer repayment terms up to 20 years, not all lenders have those options. With some, the longest term is just five years, which would probably mean a higher monthly payment.
- Origination fees: Make sure you read the fine print. Some lenders charge origination fees that can be as high as 8% of your loan amount.
As with any debt, make sure you carefully weigh the pros and cons of green loans before making a decision.
How we picked these loans
To identify the best green loan lenders, we looked at major banks, credit unions and online lenders that work with borrowers nationwide. We evaluated 20 lenders based on their available personal loan options, loan amounts, terms, interest rates, typical disbursement times and borrower criteria to select these six lenders.