If you’ve ever considered solar, one question you may have is “how do I afford the upfront costs of the system?” Fortunately, with the growing popularity of solar, there are also more options available for consumers to finance their solar. Below we take a quick look at one of these options—direct financing.
What is direct financing?
Direct finance is a method of financing where you borrow funds directly from the financial market without using a third party. A typical example of direct financing is an automobile loan, where the financial lender is the dealership selling you the vehicle. In direct financing for solar, you work directly with your solar installation company to secure and fund your loan.
What are the advantages of direct financing?
Direct financing through your solar installer can typically offer you competitive rates and a single point of contact throughout the entire process. These loans can be beneficial if you’re looking for a seamless experience on the installation of your solar photovoltaic (PV) system. Direct financing is typically available for qualified candidates with a good credit score.
Factors to consider when looking at loans
You should always take into consideration the terms and conditions of any loan.
- What is the interest rate?
- Is there an early payoff penalty?
- What is the monthly payment, and how much goes to interest versus the principal?
- What is the length of the loan?
If you’re uncertain about any part of the terms, be sure to ask questions and get clarification from the lender or a trusted and licensed financial advisor who can walk you through the details.
You may also want to consider what you need your loan to cover. Suppose you need or want to make additional improvements to your home. In that case, you may want to work with a lender that offers the option of bundling energy efficiency or energy-related improvements. A bundle can allow you to pair your solar PV installation with a roof replacement or other home improvements or upgrades. In this case, you may need to work with a traditional lender such as a bank or credit union.
To learn more about if solar is suitable for you and what potential loan options might be right for you, contact an All Energy Solar representative who can help walk you through the process.