Homeowners across the country are becoming acutely aware of the benefits solar energy has to offer: potentially eliminating their energy bills while providing ease of mind with a reliable energy source.
However, not every homeowner is able to immediately afford the initial investment for solar panels. The good news? It’s relatively easy to obtain financing for your solar panels through a solar loan that requires little to no upfront costs.
What is a solar loan?
Solar loans offer homeowners a path to invest in solar energy without paying for the installation or solar panels themselves. Generally categorized as a subcategory of home improvement loans, solar loans come in a wide range of payment structures, rates, and terms, giving the consumer the ability to decide which option is best for their situation.
With a solar loan, you’re still able to cash in on the federal ITC and many other incentives offered at the local level, making your solar system’s return on investment much quicker.
Secured loans or unsecured loans?
When applying for solar loans, your two primary options are secured or unsecured loans.
Secured loans require the recipient to put up some collateral assets, typically the home. These loans tend to have lower rates, around 3-8% APR, with HELOCs (Home Equity Lines of Credit) being the most common. Some secured loans may also be tax deductible as capital projects, though not all may qualify.
Unsecured loans, as the name suggests, are offered without an asset offered as collateral. These generally require a good credit score, and the better your credit score, the lower your rate.
Saving with solar
So, is a solar loan worth it? In most cases, absolutely! It’s still recommended to pay for your solar panel system with cash if you’re able to, as it will lead to a larger return on your investment. But for those who don’t have that kind of liquidity, exploring your options with solar loans is a great way to get your energy needs met with little to no upfront payment.
As with most large-scale home investments, be sure to shop around for multiple quotes so you can find the best deal that fits your precise energy needs.
Download our eBook, How to Finance Your Solar, to learn more about the financing options available to you before kicking-off your next home improvement project!