In today's world of sky-high electricity bills, a smart finance option like Q Card could be the way to install a solar power system on your roof now rather than later. As many solar installation companies offer Q Card, I thought I'd walk through some technical points today to help you see the pros and cons.
In my experience, choosing financing over buying a solar power system outright always comes down to the whether the numbers stack up.
If we consider a 3kW system (a fairly standard size), costing around $12,000 with a payback period of 11 years, how would you benefit from choosing Q Card? Normally, Q Card offers one to two years of interest free financing, depending on the solar installation company. Let's say you have two years interest free, which helps you pay it off in three years, but don't forget the $55 establishment fee, and an annual account fee of $45, which over the course of 3 years is $135. Then if we add in one year of paying interest at 25.25%, that year of interest will cost $1010. The total cost of the solar power system would then come to $13,500.
This 3kW system, on a north-facing roof in Auckland would save a household $1018.20 on electricity bills (if the house used half of the power and if they exported half of their solar power to the grid on an arrangement with Meridian Energy). Over three years this adds up to $3054.6 in savings, leaving you at $10445.4, which could take around 9 years to fully repay (also if you consider that power prices will increase by 4% every year). Therefore, at the end of 12 years the solar power system will essentially be giving you solar power for free.
So is Q Card financing worthwhile? While it does increase your payback period from 11 years to 12 years, I think for many people who don't have the funds for a solar power system up front believe the extra amount paid to Q card still makes it worthwhile. However, you might not get the two years interest free, which would change the numbers, and you might not be able to pay off the system within 3 years.
If two-thirds of $12,000 is paid back within 2 years then for the last year you are paying 25.25% on $4,000 for the last year, which works out to be $1010. Because your annual return on this system is $1018.20 you wouldn't want to have any more than $4,000 remaining to pay off after the interest free period. If you will take 4 or 5 years to pay off the system then Q Card might not be worth your time, and you might be better off saving a bit before you buy. I think Q Card can work someone buying a solar power in New Zealand, just as long as you are not planning on using the service for a long-term. If you would like to pay off a system over a longer period it may be worth adding to your mortgage. Always assess your options, and make an educated decision, friends! I'm always here to help.
And lastly, I have provided some of the figures to help you out with your decision-making:
- Q Card Establishment Fee: $55 or $35 Advance Fee for existing Q Cardholders.
- Account fee: $45 annually
- Interest rate: 25.25%
Thanks for reading! I hope this helps New Zealanders in their quest to install solar power systems for their homes, businesses, and schools.
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