Solar Financing 101
Why Finance?
When considering a solar purchase a common misconception is solar is only available to the wealthy and requires a lot of upfront capital to make solar a smart purchase. This could not be further from the truth. There are a ton of options available for solar customers to finance their solar project with monthly payments as low as $100 per month. With solar financing the need for a big upfront capital investment is wiped away allowing for $0 down payment.
With the expiring federal ITC many customers are purchasing solar via financing so they can take advantage of the tax credit now before it disappears.
What Makes a Solar Loan Different?
Not all Solar Loans are created equal but they do have several features that are universal.
No Early Repayment Penalty: One of the great benefits of a solar loan is you can pay back the debt at your own pace. Some folks will sign up for a 20 year loan and with minimum payments replace their electricity bill with a solar loan payment. While others will opt for shorter term loans that are paid off in 3-4 years. The big benefit to solar loans is there is no penalty for early repayment so you have the flexibility to pay off your loan when it makes sense for your finances.
One Year Free Reamortization: The big benefit to getting solar right now is the federal ITC tax credit of 26% of your total system cost. This tax credit often results in a big time refund. With a solar loan you can take that big chunk of change and directly apply it to the principal of the loan giving you lower monthly payments.
What types and terms of loans are available?
The beauty of solar loan offerings is the amount of choice and variability in loan styles and terms to fit every budget and every need.
Loan Terms & Styles: Options are available from 5 to 21 years depending on which credit union you partner with. Some offer fixed interest rates over the full course of the loan while others have variable interest rates over different sections of the loan. Each will yield different monthly payments and will impact your return on investment. The longer the loan term the more you pay in interest, so it often makes sense to do short term loans with higher monthly payments.
Interest Rates: Similar to length and terms interest rates will vary depending on the length and style of loan in addition to the credit union partnered with. In general interest rates vary from 3.49-7.99% with the primary factor determining which interest rate you qualify for being your credit score. Ask one of our solar design specialists today about what kind of interest rate you could qualify for!
