Solar panels can be financed by homeowners who want to save money on energy or make an investment for a cleaner, more affordable electric power. The average house can save as much as $65,000 during the lifetime of their solar panel system.
There are many solar financing options available, and each one has pros and disadvantages. Before making a choice, it's crucial to understand what you want and need. This will help you choose the best financing option.
Solar Panel Loans Without Interest
There's a growing number of interest-free solar panel loans available. They are subsidised by the federal and local governments to encourage more people to adopt renewable energy systems. They are usually more accessible for those with lower scores of credit and don't penalize people for paying back their loans early.
Also, you may be eligible for a home equity line of credits (HELOCs), which use the value of your property as collateral. This solar loan type is not as easy to obtain as a traditional personal loan. However, it can save you money in the long run by locking in a low interest rate.
Buying Outright
If you can afford to pay for a solar panel outright, it's probably the best way to go. This is because you'll be able to take advantage of any tax incentives and rebates that your area has to offer.
Leases & PPAs
Power purchase agreements (PPAs) are a common solar panel finance option for homeowners. Solar panel finance agreements usually provide a predetermined rate for the electricity produced by the panels. This is generally 10-30% lower than the rates charged by the utility. However, this is not a guaranteed deal, as prices can fluctuate each year.
They can also prevent you from being eligible for the federal tax credit on solar investments. You may also have problems if your plan is to sell your property and you need to relocate your solar panel system.
Solar Loans
There are several ways to finance your solar panel system. These include loans from credit unions, banks and third-party lenders. You'll want to pay special attention to your annual percentage rate (APR), origination fees, and the terms of your loan. 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. Most banks and credit unions offer this option, which is a great way to obtain the funds you need without having to make an upfront investment. It's easier to get a personal loan than a HELOC or traditional home equity loan.