Everything you need to know about Green Loans

HomeBanksEverything you need to know about Green Loans

Ecological loans are loans granted by banks or credit organizations to people who wish to carry out a project of energy saving, renewable energy, clean transportation or environmentally friendly construction.

Ecological loans are therefore granted to finance thermal insulation work, photovoltaic solar panels, the construction of passive houses, geothermal heat pumps and much more. We'll look at this in detail in this article.

What is a green loan?

Banks offer different types of ecological loans to individuals who wish to make energy improvements.

The ecological loans are loans assigned to the realization of energy improvement works.

They are generally granted by banks to finance work aimed at improving thermal and/or acoustic comfort, as well as the installation of a more efficient and less energy-consuming heating or hot water production system.

The amount of the credit is limited to the total cost of the work, without exceeding 30,000 euros.

It can be renewable (in which case the maximum amount is doubled) or non-renewable. What to remember:

  • The ecological credit allows you to obtain financing for the realization of work related to energy efficiency.
  • It should not be used to finance a complete renovation.

definition of ecological loan

Why are green loans important?

Ecological loans are low-interest loans that can be used to finance environmentally friendly projects.

They were set up to encourage good initiatives and help people who want to go green. These loans are an efficient way to help you realize a green project.

Green loans can be used for the renovation or construction of a building, for financing work to improve your home or for the acquisition of a non-polluting vehicle.

Banks offer different types of loans, including the zero-interest loan (PTZ), the tax credit on loan interest, personal microcredit and the PEL (housing savings plan).

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You can choose between a minimum of 12 months and a maximum of 10 years. This allows you to plan your project without stress, as you won't have to redeem your loan every year afterwards. To help you finance your green project, some banks offer special formulas to borrowers who wish to invest in a green home or who are considering work related to sustainable development such as installing solar heating or thermal renovation.

  • Why opt for a green loan?
  • What are the advantages of the PTZ?

How do I get a green loan?

If you are concerned about the environment, it is important to know that you can obtain an ecological loan. Indeed, for a few years now, banks have been proposing interesting offers in this area. To take advantage of this, however, you must meet certain conditions.

The criteria to be taken into account to benefit from an ecological loan are :

  • Demonstrate the profitability of the project
  • Ensure that the project will be feasible and viable
  • Choose the offer that best suits your project

The different types of ecological loans

There are different types of loans that allow you to invest in renewable energy. Find out more!

  • The zero interest loan
  • Home Improvement Loan (HIL)
  • The home savings loan (PEL)
  • The sustainable development tax credit (CIDD)

The benefits of a green loan

The ecological loan is a loan granted by a financial organization to a company or an individual for the purchase of a good or a service, in compliance with environmental standards.

The advantages of the ecological loan are multiple.

When you apply for an ecological loan, you cannot choose the nature of the project for which you are going to take out a loan. Indeed, the projects concerned must comply with the environmental standards imposed by the European and French legislators.

Also, in order to obtain the ecological loan that you have requested from your bank or other financial organization, you must show proof of the requirements related to the energy performance of the building concerned.

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This means that the work to be done must comply with the standards currently in force. If this is not the case, it will only increase the costs of the work to be done.

In addition to this requirement relating to the energy performance of the building, which is considered essential for obtaining an ecological loan from your bank or other financial institution, it should be noted that this type of financing can be granted to any individual or legal entity wishing to invest in a real estate project that respects the fundamental principles of sustainable development.

obtain an ecological loan

The disadvantages of an ecological loan

The ecological loan is a solution to finance energy saving projects. However, it is not always easy to take out an interest-free loan to finance an insulation or heating project. How to obtain an ecological loan? Banks and financial organizations offer different types of loans, including green loans, leasing and microcredit.

The green loan is a method of financing that allows individuals to obtain financial assistance for the realization of a project related to the environment. This type of credit can be granted by banks or specialized financial companies. To benefit from leasing, it is necessary to sign a contract with a specialized company. A lessor will then provide the applicant with a car or any other means of transport so that he can go to work for example. Finally, microcredit is often dedicated to people who do not have access to the classic banking system, which is often the case for people who are destitute or in a situation of social exclusion.

Microcredit is granted by private organizations such as charities.

  • Search for the best rates
  • Check that the project corresponds to your profile
  • Use a credit broker

How to manage an ecological loan?

The ecological loan is a loan that can be repaid in several installments. This type of loan can be used to finance various improvements, such as energy-efficient home renovations or the purchase of a less polluting vehicle.

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The ecological loan is granted by banks and financial organizations that are specialized in this field. To benefit from such a loan, the applicant must justify his ability to repay the loan through regular income. In addition, he must comply with a set of specifications to which he must submit to obtain his loan.

In particular, he or she must take out life and disability insurance and meet certain housing requirements (BBC standards). Before signing any contract, the applicant must compare the offers on the market to find the one that best suits his project and his needs.

Banks generally offer fixed or variable rates, with repayment terms ranging from 12 months to 10 years maximum:

  • Fixed rates do not vary throughout the term of the contract.
  • Variable rates fluctuate according to the price of the financial markets.

What is the future of green loans?

Green investing is a growing industry.

More and more individuals and companies are willing to contribute to the protection of the environment, which has given rise to the concept of green investment.

This is a growing market that could well expand in the years to come.

Ecological loans are loans intended for individuals, but also for companies, whose primary goal is to finance environmentally friendly projects. These loans actively participate in financing green investments and have a positive impact on our planet.

They can be grouped under three broad categories:

  • Energy loans
  • Biodiversity-related loans
  • Waste-related loans

The ecological loans are loans which are addressed to the private individuals and the companies. They are intended to allow the latter to finance projects that promote environmental protection. The ecological loans are often more advantageous than the traditional credits, because they offer a better profitability.

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