Jessica PirroOctober 31, 20192380
When it comes to getting a solar panel installation, many homeowners don’t even bother researching solar-powered systems because they don’t think that they can afford solar panels. However, most homeowners don’t seem to realize that they don’t have to pay cash upfront for solar panel installation.
Like any major investment, there’s financing for solar options. When it comes to solar-powered systems there’s going to be a few different financing for solar panels options, there’s leasing for solar power options, community solar panel installations options and loans for solar panel installation options.
The Overview of Loans for Solar Panels
- There are many loans for solar panels that are available to homeowners.
- Loans for solar panels can save you up to 40-70% over the entire lifetime of your solar-powered systems.
- There are many different types of institutions that offer loans for solar panel installations, from the traditional banks to the manufacturers of solar-powered systems.
- Most of the loans for solar panels are going to have the same structure, terms, and conditions as other home improvement loans.
- Loans for solar panels offer immediate returns by saving you money on your electric bills almost immediately, even while repaying the loan.
The Benefits of Loans for Solar Panels
When it comes to financing for solar panel installations there are a few reasons as to why homeowners are choosing loans for solar panels as opposed to leases.
- Technically with loans for solar panel installation, you aren’t going to be paying for your solar-powered system out-of-pocket. You’re using your monthly utility bill savings to pay back the loan for solar. You typically are going to have money left over every month, so you are still going to have instant savings.
- Loans for solar are going to allow you to build up equity in your solar-powered system. Once the loan for solar panels is finally repaid, the solar-powered system is 100% yours.
- When choosing a loan as your financing for solar power option, it is typically going to take homeowners anywhere from 5 to 12 years to repay your loan for solar. This is going to be known as the “payback period” or the “breakeven point” of your solar-powered system. Meaning that you are going to benefit from decades of free solar power.
- Because of the free solar power being generated from your solar panel installation, owning a solar-powered system is considered an investment and not a traditional cost. There’s also the fact that many solar power customers enjoy higher returns than what they would typically receive on Wall Street’s S&P 500.
- As the owner of the solar-powered system, all federal and state solar power incentives come to you. These solar power benefits are going to help you shorten the payback period and increase the ROI of your solar panel installations investment.
- When you lease a solar-powered system you can diminish the property value of your home, whereas loans for solar can actually increase the asking price.
Different Types of Loans for Solar Power
Like most loans, loans for solar panels come in many forms of credit, with features that you may not find with a personal loan. Listed below are the different kinds of loans for solar that you might come across.
Home Equity Loan for Solar or Line of Credit
A home equity loan or line of credit, both of which are forms of home improvement loans, which allows you to borrow your home’s equity.
If you are approved, a home equity loan is going to give you a lump sum that you will repay in equal installments over a set time period, while a home equity line of credit gives you revolving credit that you can borrow against and then reuse as you pay it back.
While neither is designed specifically to be financing for solar panel installation, you can use home equity funds to purchase a solar-powered system for your home. But the only time you should use these kinds of financing for solar is when you are certain that you’re absolutely sure that you can pay it back because if you can’t, you could possibly lose your home.
Unsecured Personal Loans for Solar
Banks, credit unions and online lenders offer personal loans that can be used for any purpose, including a residential solar panel installation. These loans are also not specifically designed to specifically as a method of financing for solar, if you have good credit or collateral, you might be able to get a personal loan at a favorable interest rate and repayment terms.
Some of the lenders even offer unsecured personal loans specifically marketed to pay for solar power. These loans for solar panels are typically fixed-rate and paid in equal installments over a set time period. As with other kinds of unsecured loans, since they consider loans to come with a higher risk for the lender.
Secured Loans for Solar
Some solar panel installations companies offer loans that are going to allow you to apply for financing for solar power through them directly. The loans for solar power are secured by the solar-powered system itself - basically, if you don’t repay the solar power company, the lender can repossess the solar-powered system. Before you apply for financing for solar from a solar panel installation company, you should always compare loan terms, rates and costs with other loans for solar options.
R-PACE Loans for Solar
Residential Property Assessed Clean Energy Loans, which are funded as a result of government programs partnering with private lenders may be another option to help finance your home with energy upgrades like solar-powered systems. But with the kind of loan for solar, you will pay the cost off over a set number of years as an assessment on your home’s property taxes, in other words, you get a higher tax bill, but these loans for solar panels are not available everywhere.
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