Understanding Solar Financing

Home Solar Financing

Many people think that solar panels are out of their budget, but statistics from the U.S. Department of Energy, show that the cost of photovoltaic solar systems has actually dropped over 65% since 2010. The solar industry has grown substantially over the last 70 years and home solar is more accessible than ever with lower manufacturing costs, increased availability, and the introduction of significant government incentives.

Homeowners today are more capable of financing the cost of solar panels through a variety of options, including low-interest loans, leasing, and some help from the federal solar tax credit. Below are all the different financing options available to homeowners who are thinking about or want to go solar.

Financing Solar Panels Can Increase the Value of Your Home

According to CNBC, when you opt to buy or finance solar panels for your home, you can increase the value & equity in your residence by as much as 4.1%! Additionally, a recent study from Lawrence Berkeley National Laboratory found that installing solar panels added $4 per watt of equity to the homes in the study. If you install a 5kW (5,000-watt solar system) you can potentially increase your home’s equity by $20,000 or more!

Solar Loan

Solar loans all boast the basic structure of any loan such as the terms and conditions for a home improvement loan. The average interest rate for a solar loan is anywhere between 3-8%. However, some states also provide subsidized solar energy loans that offer rock bottom interest rates.

Short-term loans have higher monthly payments but boast lower total costs during the life of the loan. Usually, you can choose from a five-year loan up to a twenty-year loan. The short-term loan usually has a lower interest rate than the longer-term loan.

You’ll encounter two types
of solar panel loans:

Secured loan

A secured solar loan uses your
property as collateral for the loan.

Unsecured Loan

Unsecured loans are typically granted on the good standing of your credit score and positive assessment of your payment history.

Financing Your Solar System with a Credit Card

It is possible to purchase your solar energy system with a credit card depending on your credit limit, though this isn’t always a great decision because of the high interest rates on credit cards. Unless you have a credit card with an introductory 0% APR, you will end up paying a huge amount of money in interest. Even with a 0% APR credit card, it is not always a great idea because the full amount that you charge to your card must be paid off before the deal expires.

Home Solar Lease

A solar panel lease (referred to as a power purchase agreement or PPA) is an option for some. If you meet the following criteria, a PPA could be your best option:

• Use electricity obtained from a renewable resource.
• Avoid the added cost of maintaining and repairing the solar system.
• Do not qualify for any federal or state investment tax credits that some obtain by buying a system.
• Want to reap the benefits of solar savings immediately and not wait a year or more for a purchased solar system to start paying for itself.
• No upfront costs
  

Current Solar Tax Credits

There is a federal tax credit for homeowners who choose to use solar panels to power their home. It allows you to write off 26% of the cost of your solar system from your federal income taxes. It is known as the ITC, investment tax credit.

• Own your own solar system
• Pay taxes to the federal government

There is no limit on the value of the tax credit, so you can easily save thousands. In recent years, the cost of installing solar has dropped substantially and with the ITC, it has never been more affordable or readily available. Depending on where you live, your state could also have their own tax rebates available.

Our Recommendations for
Financing Your Home Solar System

There are a number of options available for financing your solar system.
When considering all the options, with all features and benefits, we recommend financing your solar conversion with a solar loan. The reasons and benefits include:

• Low-interest rates
• No upfront costs
• Most accessible and efficient option
• Greater long-term savings than leasing
• Reduces or replaces monthly power bill

At Noble Solar, we can help walk you through the easy process for getting a solar loan. We’ve had great success helping customers switch to solar with a solar loan from Sunlight Financial and Loanpal. They both specialize in solar energy loans and make it easy to take advantage of the federal tax credit. They also have competitive interest rates, usually less than 4%, so you pay less for your solar panels and installation.

For more recommendations and information on financing your renewable solar energy system, contact us today!