Financing solar panels is a great option for homeowners looking to reduce their energy bills or invest in cleaner and more affordable electricity. The average house can save as much as $65,000 during the lifetime of their solar panel system.
You have a variety of solar financing options, and they all come with pros and con. Before making a choice, it's crucial to understand what you want and need. This will help you choose the best financing option.
Interest-Free Solar Panel Loans
A growing number of solar panel loans come with no interest. They are subsidised by the federal and local governments to encourage more people to adopt renewable energy systems. These loans are more accessible to people with low credit scores, and you may not be penalized for paying your loan off early.
A home equity line-of-credit (HELOC) that uses your home's value as collateral may also be available. This type of loan isn't available as easily as a standard personal loan. But it will help you to lock in an affordable rate and lower your borrowing costs.
Buying Outright
The most cost-effective option is to buy a solar system outright, if you are able to afford it. This is due to the fact that you can benefit from any rebates or tax incentives offered in your region.
Leases and Payment Plans Agreements
PPAs are one of the most common ways to finance solar panels for homeowners. The solar panel power rate is usually set for a period of 25 years. This is typically 10-30% less than what you would pay to the utility. Prices can fluctuate year-to-year, and this is not an absolute deal.
Leases and PPAs also don't give you ownership rights to the solar panel system, so you may not be eligible to claim the federal investment tax credit for solar energy. You may also have problems if your plan is to sell your property and you need to relocate your solar panel system.
Get A Solar Loan
There are several financing options, such as loans from banks, Credit Unions and third parties. Your annual percentage rate (APR), your origination fees, as well as the terms of your solar panel loan are all important factors to consider. All of these factors will impact the cost to install solar panels. It is important that you shop around and find the best offer.
Residential Solar Financing
A solar loan is one of the best ways to finance your solar system. This option is offered by most banks or credit unions. It allows you to borrow money without making any initial investment. It's easier to get a personal loan than a HELOC or traditional home equity loan.