Solar loans are rapidly becoming one of the most popular choices for financing solar today. They frequently provide better overall savings than solar leases or PPAs, as you own the system and consequently receive the 30% Federal Investment Tax credit for your solar purchase, as well as any state and utility rebates. In addition, you don’t have to pay for solar lease maintenance costs or profit margins.
Most importantly with the advent of zero-down solar loans (loans where no upfront payment is required), homeowners are able to immediately start saving on their power bill, while increasing the value of their home by the value of their panels.
Solar loans are loans issued expressly for putting solar panels on a house. They have a principal amount, an annual interest rate, monthly payment requirements, and a payback period, just like any other loan. For example, you might see a $20,000 solar loan with a 4.5% interest rate, and a fifteen-year payback period. These loans work quite similarly to a home improvement loan or an auto loan.
Banks, credit unions and solar installers issue loans, so you have plenty of potential providers to choose from. These providers are creating new loan options all the time, so it is becoming easier and easier for homeowners to find a loan that fits their exact financing needs.
Solar Loan Advantages:
Loans are ideal for homeowners who:
There are three types of solar loans available today to consumers – secured, unsecured and municipal. We drill into the differences in the table below, but the principal difference between the two is that secured loans use your home as collateral, while unsecured loans utilize the solar panels themselves as collateral.
|Type||Secured Solar Loans||Unsecured Solar Loans||Municipal Solar Loans (PACE)|
|What is used as collateral?||Home||Solar Panels||Home|
|Is there an FHA Guarantee?||Yes||No||Depends|
|Loan terms||5-20 years||5-20 years||Varies|
|Interest rate||3.5-6.5%||3.5-9%||3% and up|
|Is interest tax-deductible?||Yes||No||Yes|
|Special notes||Lower origination fees than unsecured|
Solar installers, banks, credit unions, and independent financing companies all provide loans, so the options for homeowners are increasing all the time.
All of our pre-screened providers offer loan options along with other financing options.
Interested in getting exact prices for the cost solar for your home? Get competitive solar quotes from qualified, trusted installers in your area. To see an estimate for how much you could expect to save and how much a solar system would cost, try our solar calculator.