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Green Loans For Good & Bad Credit

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What Is A Green Loan?

Business owners and homeowners can take advantage of green loans to make eco-friendly and energy-saving improvements while saving money on their utility bills every month. If you are are interested in green and eco-friendly home improvement financing, contact us today!

No matter your credit score, if you want to secure green financing anywhere across the U.S., Acorn Finance will provide pre-qualified loans in seconds to get funds quickly. Easily sort all the loan offers by what matters to you: interest rate, payment amount, length of the loan term.

Never impact your credit score when comparing rates between our network of trusted partners. 100% online, customer-friendly process is designed to help you find affordable payment options with lenders that can quickly finance green home improvements.

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Green Loan Meaning

Business owners and homeowners can take advantage of green loans to make eco-friendly and energy-saving improvements. Perhaps you're looking to finance solar panels, finance energy-efficient appliances, or finance a water heater, but the cost is holding you back. If so, you should look into a green loan. Making eco-friendly improvements can reduce your environmental footprint while helping you save money over the long term by reducing energy bills. Keep reading to learn the ins and outs of green loans.

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What does "green loan" mean?

A widely accepted way to define green loans is lending that is subject to specific environmental criteria. Green loans were initially introduced as an initiative to encourage homeowners and business owners to make energy-saving and eco-friendly improvements. Green loans differ from traditional loans because the repayment can be added to your electricity bill each month. The idea is that the cost of the loan should not exceed the cost of energy saved. In most cases, repayment is spread out over 10-25 years. Green mortgages are a similar alternative to green loans. Green mortgages offer borrowers a 1% discount on their mortgage rate for an existing home. On new construction, borrowers can receive a 1.25% discount on their mortgage rate.

What does a green loan cover?

Oftentimes when we think about energy-efficient homes we think about the obvious improvements such as solar panels. However, it's important to realize that there are so many more ways to make homes more environmentally friendly. Green loans can be used for just about any home or business improvement that is deemed eco-friendly including but not limited to...

Solar panels

Cool roofing

Landscaping (turf instead of grass, rocks, etc.)

Pool pumps

– LED lighting

Energy Star appliances (washing machines, dishwashers, etc.)

Low water use irrigation system

Upgraded windows

– Insulation improvement

Heating and cooling systems that are more efficient

What is required to acquire a green loan?

In order to secure a green loan or mortgage borrowers must commit to...

– Reducing energy intensity

– Encouraging and educating tenant on sustainable practices

– Delivering energy performance data

– Managing buildings and homes more efficiently

Why is green financing needed for the world?

In all honesty, we do not really need green financing in the world. What we need is a society committed to reducing their environmental footprint combined with ways to make this more affordable. While green loans do encourage business owners and homeowners to make eco-friendly improvements there are other types of loans available.

Are there added benefits to getting a green loan?

Compared to most traditional loans green loans have a few advantages. Green loans and personal loans do not require any collateral. This means you do not need home equity or cash upfront to receive the loan. Using a green loan or personal loan is less risky than using a home equity loan. If you live in a state that offers their own green lending program – which a number of states do – you may be able to take advantage of their varying eligibility requirements. In addition, green loans may have lower interest rates than comparable options. Typically green loan interest rates come in below 5%. Personal loans through Acorn Finance also have rates as low as 6.99% making them a competitive option if you cannot qualify for a green loan or want to use your loan for more than just eco-friendly improvements.

What are the downsides of a green loan?

One of the biggest downsides to a green loan can be the obstacles trying to secure one. An energy audit is usually one of the first steps required for getting a green loan. The cost of improvements should be detailed during the audit. Repayment terms and borrowing amounts for green loans are dependent upon necessary modifications to make your home more environmentally sustainable. Securing a personal loan can be much easier with comparable terms in most cases.

Can I get a green loan with bad credit?

Green loans are available for a wider range of credit scores than comparable options. However, bad credit personal loans exist, and loans are available for all credit types. If you get denied for one you should try to apply for the other.

Best alternatives to green loans

As we discussed earlier, securing a personal loan can be easier than securing a green loan. In addition, there are no limitations on how you spend the money that you borrow. Acorn Finance is a top-rated platform that offers personal loans up to $100,000 and terms up to 12 years. Interest rates start at just 6.99%.

Let's take a look at the pros and cons of a personal loan...


– Loans available up to $100,000

– Competitive interest rates as low as 6.99%

– Terms up to 12 years

– Receive pre-qualified offers without impacting your credit score

– Easy to activate


– Not a direct lender

– Credit may be required for approval

What is a green loan?

Green loans are unique because they have a specific purpose. Unlike a personal loan which you can get for all kinds of things, a green loan is used specifically for making environmentally friendly modifications to your home or business. Its primary purpose is to give people access to the money they need to make changes to reduce their C02 emissions. It can be considered eco-friendly financing. Some ways you may use a green loan including financing solar panels, triple pane windows, geothermal heating/cooling systems, and so forth.

Green loans can be in the form of a personal loan or a mortgage. A green loan is usually a better way to go if you need a smaller amount since it usually requires less paperwork and fewer fees. Green mortgages are available through some lenders and can provide funding for major improvements like all new windows, geothermal heating systems, solar panels, and more. The requirements to qualify will vary from lender to lender, and so will rates and repayment terms. Like all financial products, it is a good idea to do some research before committing to a lender. If you are considering a personal loan for green products, you should check offers at Acorn Finance.

What is a green personal loan?

Green personal loans are a type of unsecured personal loan. The borrower does not assign any collateral to secure the amount loaned. They can be used in any number of ways as long as the end result is to reduce the consumption of energy needed to run your home or business. This will obviously reduce emissions which is the ultimate goal. Ideally, your energy bill should be reduced, but it may take a long time to offset the cost of the loan from the energy savings. Some people will get a green loan and make environmentally-friendly changes to their homes or business because they believe it's the right thing to do rather than to save money on energy.

People usually get green personal loans when they are considering major eco-friendly upgrades. This is because the costs of these renovations can be very high and people would rather pay for them over time than fund them all at once. The cost savings on energy bills such as electricity, heat, and water can sometimes partially offset the cost of a loan making this an attractive option.

Can I pay off a green loan early?

If you are interested in paying off your loan early, it may be possible to do that. In fact, it may even be a very good idea to pay off your green loan early as long as there are no prepayment fees. When you choose loan terms, you may have the chance to pick between a long-term personal loan with a lower payment and a short-term personal loan with a higher payment. If you plan to pay the loan off early, the longer term may be a cost-effective option. In the event finances are tight for one month, you will be committed to a lower monthly payment. However, if you can pay the loan off early, you may be able to save money on interest.

If your loan is added to your electric bill, you may not want to pay it off early. While the cost of your electric bill may be higher, you will not have another separate loan payment to manage. The idea, too, is that your energy savings should lower your energy anyway, so adding a loan to your electric bill may not increase your overall payments by too much. At Acorn Finance, our lending partners do not charge prepayment penalties, so you can pay a green loan off early.

Are green loans worth it vs. traditional loans?

Well, like everything, there are good things and not-so-good things about green loans vs. personal loans. First, let's talk about what's good:

Interest rate

You might get a better interest rate. Some green finance companies offer rates as low as 5%, while personal loans have an average rate of 9%

Lower monthly payments

You may get a longer term to pay off the loan. This can reduce your monthly payment.

Government assistance

There may be government assistance to help with some costs, such as paying for an energy audit.

Combine electricity bill and green loan payment

Some lenders allow you to add the payment to your electricity bill, so you have fewer payments to manage.

Now let's look at the downside:


You may need an energy audit prior to funding.

More information required

You may need to give specific details to your lender about the nature of the project.

Spending limitations

You may be limited in how you spend the funds.

Longer repayment

A longer repayment plan means you may have that loan for a longer period of time.

Personal loans normally have a higher interest rate and shorter repayment terms, but they can be less work, and you can use the funds however you like. In some opinions, a green loan may make it easier to stick to your plans. The freedom to use funds however you would like that comes along with a personal loan can cause troubles. While a green loan may be harder to secure, it can help you stay on track while helping you understand how to get the maximum benefits from green renovations.

Often, an energy audit is required and the auditor will let the borrower know exactly what they need to do to get the maximum benefit from their project.

What is green finance and why is it important?

Lenders need to secure money to lend before borrowers can get loans. Green finance is the branch of finance that uses investors and lenders to lend money to people for eco-friendly purposes. The goal is to help people fund projects that will have a positive environmental impact. Green finance encourages lenders and investors to lend people money for these purposes. Funding for environmental initiatives is found in all parts of the world as people are becoming more aware of the environmental impact of their lifestyle choices. Green finance companies are becoming more significant in the financial services sector.

The importance of green finance should not be underestimated. It encourages sustainability, which is vital for future development and ongoing economic growth. Environmental changes are having a significant impact on parts of the global economy. In recent years, people have been coping with extreme heat, drought, and devastating natural disasters such as hurricanes. This, in turn, affects our ability to provide the necessities of life, such as providing enough clean water and growing food.

Green finance can help businesses and individuals use resources in a way that will cause less harm to the environment to ensure a sustainable future. There is also a lot of money being invested in research and development for sustainable solutions. As more people embrace these new developments and technologies, more money will be made for investors in green finance. For these reasons and more, green finance is becoming an important part of the financial sector.

How does a green loan work?

A green loan works by giving you money specifically for projects that are intended to boost energy efficiency in your home. Usually, a green loan is used for a large-scale project that requires a significant investment, such as solar panels, geothermal heat pumps, or triple-pane windows. All of these projects require a large up-front investment that most people aren't able to pay for out of pocket.

Most often, a green loan is a personal loan that people use for eco-friendly home improvement projects. Sometimes the lender will not check what you are using the loan for, so you don't need to prove you are using it for green home improvement projects. Alternatively, you may be able to access state and local funding to make your home more energy efficient. Some credit unions may offer loans at a discounted rate for green energy projects. In most cases, a personal loan is easiest to secure.

Are green loans cheaper?

In some cases, green loans can be cheaper. There are some lenders that offer green loans at a discounted rate. Whether you get a discounted rate or not, you may be able to take advantage of tax incentives for making your home more energy efficient. Whether or not green loans are cheaper can depend on your credit score and other factors.

If your credit score is good to excellent and you have a low debt-to-income ratio, you will most likely qualify for a green loan that has low interest making the investment very worthwhile. You should also consider that any eco-friendly home improvement will likely save you money in the long run. For example, if you are financing a solar system, you may just be able to replace your electricity bill with a solar payment. Over time, you will pay the system off and just be left with a small to none electricity bill.

When thinking about whether or not to take out a green loan, consider how much money you will save. In the United States, the average household spends about $2,150 per year on energy bills. If you are taking on a green project that will drastically lower the energy bill, the green loan would be considered cheap to take out in relation to how much money you will save. Homes with sustainable and energy-efficient features may also sell better and for higher prices. Overall, green loans have many advantages that make them cost-effective and valuable to the borrower. Reducing your carbon footprint is not only beneficial to your bank account but our environment too.

What are green finance products?

Green finance products can really be anything that makes your home greener, more eco-friendly, or more energy-efficient. One of the most common green finance products is solar panels. They can be very expensive though, which is why many homeowners choose to take out a green loan when they want to have panels installed.

With over 2 million homes in the United States having solar panels now, they are becoming a more and more popular choice for consumers. The average cost of solar panel installation is about $30,000. It could be more or less depending on the size of your home and how many panels you need to have installed. The larger your home and the better quality of panels you buy, the more expensive the project will be.

With the addition of solar panels, you could save anywhere between $10,000 and $70,000 over a 25-year period. You might also be eligible for a federal tax credit.

Green finance products also include water-saving systems. You could save about $380 per year when you update your home's water technology and install more eco-friendly options. The exact savings will depend on the system you have installed though and the size of your home.

Water savings systems that are considered green finance products are:


Soil moisture sensors

Irrigation controllers

Rain sensors

Geothermal units could also be considered green finance products. These are a type of pump that uses ground temperature to heat or cool your house and provide hot water. Before you install the water pump, make sure it will give you savings in the long term.

Geothermal units can cost between $10,000-$25,000. The savings though can be as much as $1,500 per year. With a large amount of savings, you should be able to make up for the initial startup costs. It's estimated that about 50,000 geothermal pumps are installed every year, so they are becoming more and more popular in the United States.

Green loans can also be used for energy-efficient appliances. These include washers, dryers, freezers, and dishwashers. These will most often come with an Energy Star certification. These appliances can save you hundreds of dollars per year. The new appliances can also increase the value of your home.

Although these are some of the things that people can use green loans for, this list isn't exhaustive. A green loan can be used for anything that might make your home more energy-efficient.

How do you finance green projects?

Green projects can be financed in many different ways. A common way to finance green projects is by getting a personal loan that can be used to pay for the projects and then paid back in monthly installments.

Green lending mortgages are also an option. Green mortgages are offered to people that are doing projects or building homes that will have eco-friendly features. When you are taking out a green mortgage you might have to provide some information that shows you are taking steps in environmentally beneficial ways.

Information requested for a green mortgage might include:

Reducing energy intensity in your home or building

Providing energy performance data

Managing the buildings or home more efficiently

Engaging tenants or family members on sustainable practice

No matter what kind of loan or purchasing you choose, you need to make sure you know all the terms and conditions of your loan. You should also ensure the monthly payment is something you can handle easily, and it won't become a financial burden.

You can choose an unsecured personal loan to pay for some of the following projects:

Solar panel installation


Bath or kitchen remodels using sustainable materials

Water-efficient plumbing

Double or triple pane window installation

Low-VOC floors

If you are purchasing energy-efficient appliances you can ask the retailer if they offer financing. In some cases, retailers may offer promotional financing for big ticket items. However, if you are replacing several appliances, the promotional period may not give you enough time to repay the loan. Personal loans are one of the easiest and fastest ways to secure funding for green home improvements. At Acorn Finance you can check personal loan offers for green home improvements with no impact on your credit score.

What can you use a green loan for?

Green loans are essentially personal loans that help a homeowner acquire funds that they can apply to specific projects to increase the energy efficiency of their home. This is a mutually beneficial deal for both the homeowner and the environment and society as a whole. As energy efficiency is increased, the individual homeowner sees a decline in their energy bills, which saves them money. The environment benefits when it takes less electricity to meet the energy demands of the homeowner. The environment can benefit even more if the green loan is used to install solar panels on the home. Then not only does the home require less energy, but if the home can be somewhat or entirely self-sufficient with a green renewable energy source rather than relying on an electrical grid that could supply some or all of its energy through fossil fuels, then the home could be at or near carbon neutral. A carbon-neutral household benefits the environment and society as a whole. Green loans are intended, like the solar installation example above, for more large-scale energy efficiency projects that require larger upfront investments. There are many energy-efficient updates that you can do with minimal investment that you can either pay cash or use a credit card for, but for the expensive projects, green loans are ideal. So, what would be some examples of energy-efficient updates that may require a green loan, and what are some that may not?

Energy-efficient updates that may require a green loan:

Solar panel installation: A solar panel installation is one of the best things that you can do with a green loan. The main reason is that if you build a large enough solar installation, you could make your home 100% energy independent. Additionally, if you happen to generate more energy than your home uses, the surplus could be sold back to the utility company as a small profit. Those cost savings add up, and at the same time you are making payments on your loans, you will be recouping the costs of the initial installation. Without getting deep into the specifics about the size of your solar installation, your household's energy needs, the amount you spend on your monthly energy bill, the daily average of peak sunlight hours of where you live, and the cost of your initial investment, you should rest assured that your solar panels will pay for themselves over time. When considering all those factors, it is said that the average household in the US recoups the cost of their initial solar investment within 6 to 10-years. Combine that with the 26% Federal Solar Investment Tax Credit and you can understand why so many people are using green loans to pay for a new solar installation at their homes. As of the time of this article, 2022 is the last year that the solar ITC will be at 26%. In 2023, the credit will drop to 23%.

Geothermal installation: Geothermal installations are pumps below ground that use the subterranean temperature to help heat and cool your house as well as heat your water. The upfront costs of having a geothermal pump installed in a home can be quite expensive ranging from $10,000 to $25,000, on average. This is why green loans are useful to cover the upfront costs while you can save up $1,500 a year on heating and cooling costs to eventually recoup the initial investment.

Energy-efficient renovations: There are a few big-ticket energy-efficient renovations that you could make to help your home retain heat in the winter and keep cool in the summer. Drafty and poorly insulated homes can cause tremendous waste as your HVAC system works harder to keep a consistent temperature as air freely flows from the interior and exterior of your home. You can have new triple-pane glass windows put in as well as even have additional windows added to allow in more natural light, you can add insulation to the walls, floors, and ceilings of your home, and you can install a brand new energy-efficient HVAC system.

Energy-efficient appliances: Updating your dishwasher, washing machine, dryer, refrigerator, freezer, and any other appliance you may have with newer energy-efficient appliances can do wonders for your energy bill as well as reduce the overall energy demand of your household. Replacing all of your appliances can be quite costly, that is why a green loan may be put to good use by helping pay for those purchases.

Energy-efficient updates that may NOT require a green loan
In general, there are many other smaller things you can do around the house to increase the overall energy efficiency of your home. You can replace older light bulbs with energy-efficient bulbs. Choose to hang-dry your laundry when weather permits and install a clothesline. You can unplug appliances and electronics when they are not in use. You can add weather stripping and make sure you install plastic film insulation on all your windows in winter. All of these smaller actions may be either free, or they cost so little you can pay for them out of pocket, however, they can still have a big effect on the energy efficiency of your home.

How can I get a green loan?

If you are looking for a loan to pay for making energy-efficient updates to your existing home, or you are looking to purchase an energy-efficient home and then make it efficient, the process is not too different from traditional types of financing. Some lenders have specific loans that they call "green loans", however, they are not very different from a traditional unsecured personal loan. The only difference would be that a lender could possibly expect you to use a certified installer or only purchase equipment and appliances that meet certain thresholds of energy-efficiency standards as part of the terms of the green loan. But, the process to obtain either type of loan would essentially be the same. First, you will want to know where you stand by checking your credit score. You are entitled to one free copy of your credit report from each of the three main credit reporting agencies every 12-months. You can either contact them for a copy or you can simply go online and use one of the many free credit monitoring services available. Once you know your credit score, you can begin to shop lenders to see who offers "green loans", what their minimum requirements are. If you are searching for a personal loan, the best thing you can do is prequalify. By going online and filling out a few questions, you could see if you qualify for a personal loan and for how much you could qualify for. Then you can shop and compare various online lenders from all over the US to see who can offer you a personal loan with the best interest rates and the most favorable terms. Once you find an offer that you like, you can complete the application process directly with the lender, get approval, and have the funds deposited into your personal account in a short period of time. Once you have access to the funds, you can go ahead and begin to pay a solar install, a geothermal installer, or a general contractor who is going to oversee all the energy-efficient renovations that you have planned. While the process is ongoing, you can then begin to make monthly payments to begin to pay off the loan.

If you are looking for a green or energy-efficient mortgage, most of the steps are the same with the following exceptions. If you are looking to buy a home to convert from inefficient to efficient, along with an appraisal, you will have to have a complete home energy audit done. The home energy audit will confirm that the house is energy-efficient, which updates should be completed to convert the home, and outline the potential monthly energy savings the homeowner could expect.

If you are looking at using an energy-efficient mortgage to pay for updates to your current home, all the same details apply, however, the appraisal and home energy audit will determine how much the home is worth and how much the home will be worth after all the updates. Then a new mortgage for the new larger amount will be drawn up for you to sign.

What is a green energy loan?

A green energy loan is an unsecured personal loan that can be used to make a home more environmentally friendly and more energy efficient. Some examples may be replacing an aging home's HVAC system with a brand new Energy Star HVAC. Other Energy Star appliances also could be purchased with the funds to replace any older less efficient models. Appliances like washing machines, refrigerators, dishwashers, and clothes dryers are just some of the examples of appliances that can consume a lot of energy and that should be updated if possible. Other uses for a green energy loan would be installing water conservation systems to prevent water waste and the installation of solar panels to become energy self-sufficient.

What is an unsecured green loan?

An unsecured green loan is the same thing as a green loan or a green energy loan. It is a type of personal loan that can be used to finance home improvement projects that make a home more energy-efficient. It could be something as big as installing solar panels or a geothermal pump. Or, it could be something a bit smaller like replacing older appliances with newer more energy-efficient ones. The term unsecured only means that no collateral is required to secure the funds. Collateral would be an item of value that you own. It could be something as large as a house or an automobile, or it could be access to a retirement account or some stock and/or bonds that you owned. It would be between you and the lender to determine what would be efficient to secure the loan. When a loan is secured, it means that if you happen to fall behind on payments and eventually default, the lender can seize the asset and sell it in an attempt to recover the loan balance. Any surplus funds from the sale would be returned. Since most green loans are unsecured, this would not be something that you would have to worry about unless your credit score was below the minimum credit requirements of the lender and they required it.

Can I get a loan for solar panels?

Yes, not only can you get a loan for solar panels, it is one of the best ways to use the funds from a green or personal loan. Solar panels are a green investment that pays for themselves over the course of 6 to 10-years. The amount of money a household could save on its energy bills by becoming 100% energy independent through solar power adds up to hundreds of dollars every year. The average US household could save anywhere from $1,200 to $2,000 per year depending on the size of their solar installation and the amount of energy they use. Those savings can be applied directly to helping pay off the loan that covered the initial investment of the solar panel installation. In addition to the real cash savings a household will see each year, there are federal, and sometimes even state or local tax incentives to help offset some of the burdens of the initial investment.

What is a green mortgage?

A green mortgage is a loan that can help you purchase an already certified green home, buy an old home to convert from an energy-inefficent home to an efficient home, or help you convert your existing home into an energy-efficient home through a cash-out refinance.

What is an eco-friendly loan?

An eco-friendly loan is another way of saying a green or green energy loan. It is a loan that is obtained specifically to help with the upfront costs associated with updating a home or business with more energy-efficient technologies and infrastructure.

Why do we need green loans?

In short, green loans are necessary to help stimulate sustainable development. Sustainable development is essential to maintaining economic growth while taking direct action to combat climate change and global warming along with all other types of environmental degradation. One of the biggest oppositions to the green movement is the idea that economies will suffer, jobs will be lost, and that implementing green policy is too expensive or that it is not economically feasible. Sustainable development is a direct response to that argument.

What is the goal of green loans?

The main goal of green loans is to support environmentally sustainable economic activity through the encouragement of financial institutions to introduce capital onto the market that is to be specifically used by individuals and businesses to help relieve some of the financial obstacles that certain green energy compliance can present in an effort to make a positive impact on the environment and the future.


In conclusion, personal loans and green loans can have very comparable terms that can make innovating eco-friendly improvements more affordable. Acorn Finance allows you to submit one application – that does not affect your credit – and receive multiple personalized and competitive offers within seconds. From start to finish Acorn Finance makes securing a personal easy and safe while ensuring you receive the best offer!

Three steps to get started with Acorn Finance:

#1. Complete and submit a short loan application online

#2. Receive multiple pre-qualified offers

#3. Get connected with lenders to obtain your pre-qualified loan

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