How Does Solar Financing Work?
Solar panels are one of the best investments you can make. The environmental, financial, and community value that solar provides has made it a mainstream residential and business energy source. Given the significant upfront cost necessary to maximize the value of solar panels, many customers opt to pay with a solar loan or lease rather than pay in cash.
How do I pay for solar panels?
A customer has several different options when acquiring a solar panel system. Solar loans provide a convenient option for a customer wishing to purchase a system without paying cash upfront. These loans exist in many different forms and can finance the entirety of a system’s cost. The energy savings provided by the solar panel system would pay back the loan quickly.
Some customers choose to lease solar panels from a company for a fixed monthly cost. Though this option requires no upfront cost, it is not ideal in maximizing the savings solar can provide. Leasing panels provides a viable avenue for customers who do not have good credit or are not concerned about home transfer or custom options.
Learn the main pros and cons of buying and leasing here.
How do I get a solar loan?
Solar panel loans operate under the same structure of a typical loan for a home or car. A customer agrees to borrow an amount of money from a lender to pay for the upfront cost of the system. With the savings the panels provide, this customer can immediately begin to repay the loan. Most customers repay a solar loan within about 5-10 years (a solar panel’s warrantied lifetime is 25 years).
Banks, solar companies, credit unions and utilities are just some of the lenders who finance solar panel systems. These loan options come in various forms such as 401K loans and HELOC (home equity line of credit). Rates are typically between 2.99%-4.99%.
Loans are advantageous as they offer a $0-down option while still maintaining a customer’s eligibility for the federal solar tax credit (ITC) of 26%.
Get in touch with our team if you need assistance finding the right loan option for you.
How does solar leasing work?
Leasing panels or signing a purchase-power-agreement (PPA) means the ownership, installation, and maintenance stays with the solar company. Leasing panels offers the advantage of no money down and no maintenance. Some leasing companies offer first-year specials to help a leasee get started with solar. Given that the owner of the panels is still the solar company, they handle the maintenance and installation of the panels. In turn, a homeowner loses some control over the decision-making behind where panels are placed or how they look.
Curious which financing option is best for you? Get in touch with us for a free consultation.