Financing Solar Panels: Exploring Loan Options and Payment Plans

In the conditions of a periodic increase in electricity tariffs, homeowners are actively looking for ways to save on services, as well as to ensure a stable energy supply. A profitable solution for achieving this goal can be solar systems selected according to individual requests. They provide several advantages at once.

Owners can save on electricity bills, reduce the impact on the environment, get a financial benefit for selling excess energy produced, and also provide themselves with an uninterrupted energy supply for at least 20-30 years. The only feature that may cause doubts about the purchase is the high cost of the initial investment. However, there are different options for solar financing. This allows you to choose the optimal solution for your budget.

Source: Green Citizen

What Are the Types of Financing for Solar Panels?

Dozens of companies are operating in each state offering customers several solutions at once. All of them have their advantages and disadvantages. To choose the best of them, it is worth taking a closer look at the existing options.

Purchase With Full Transfer of Ownership

The simplest and most profitable option offered by solar companies is the purchase of solar systems. It is quite popular. This is confirmed by the Market Watch survey. It states that in March 2023, about 66% of respondents purchased solar systems. Experts expect this number to grow steadily as the devices become more affordable and their benefits become more apparent.

Most solar suppliers currently offer two main payment methods: credit card and cash. Everyone chooses the most convenient solution for himself. The initial investments in this case will be quite high. The buyer will have to pay several tens of thousands of dollars. After all, on average, the cost of one installation varies between 31-35 thousand dollars.

However, such a solution provides several important advantages. One of them is receiving financial benefits. These can be beneficial programs and offers at the state or local level. They help reduce the financial burden when purchasing solar systems and save money. For example, it can be a tax credit or a discount for the purchase of systems.

To find out about all these programs, you should contact the specialists of solar companies. They'll be happy to share the details and help you decide which one is right for you. In addition to financial incentives, the purchase of solar systems has another advantage - full transfer of ownership. This means that you can use them at your discretion. In addition, during the sale of real estate with structures, there will be no difficulties with registration.

Purchase of Solar Systems on Credit

If a limited amount is allocated for solar investments, then it is worth considering the possibility of purchasing credit. Unsecured personal loans are available from online lenders, credit unions, and banks. The size of the amount depends on the organization. On average, solar loans can range from $1,000 to $100,000. Interest rates also differ. Their maximum value reaches 36%, and the minimum is 6%.

Solar panels payment plan is the same everywhere. A financial institution provides a one-time loan amount, and you need to pay it back within a certain period. The payment is divided into several equal parts, which are paid at a specified time once a month. The total credit term can be 2-7 years. Importantly, solar lending does not require collateral.

If such a solution is suitable for the budget, then you should first find out which loans for solar panels are offered by financial institutions. They can differ according to the following criteria:

        Amount of monthly payment: This aspect is as important as the amount of the rate. Before choosing the best solution for yourself, make sure that the indicators correspond to your budget. This will reduce the risks of significant costs in case of late payments.

        Annual Interest Rate: When comparing multiple solar loans, it's also worth considering the annual interest rate. This indicator reflects the total cost, which includes all possible fees and interest.

        Lending period: Loans with longer repayment terms usually have lower monthly payments. However, the total cost is higher than in short-term loans.

Another important criterion is the size of the commission. Some financial institutions charge opening fees. The amount of these payments can vary between 1-10%. This aspect must be checked before signing the agreement. After all, the specified amount is charged before sending funds to the account. As a result, you can get a smaller amount than what is needed to purchase solar panels on credit.

HELOC or Cash-Out Refinance

In addition to the 2 main methods of financing solar systems in the form of a loan and purchase with own funds, there are several additional solutions. One of them can be a HELOC. This is what they call an equity line of credit. Using this method, you can gain access to one of the most valuable assets - home equity. It can be used as a specific loan with low-interest rates.

Another option for financing solar panels is to refinance your mortgage with cash. Thanks to this, you can withdraw a certain amount of funds from the housing capital. This money is usually set aside to pay off debt or make certain home improvements. Solar systems may be one of them. However, the program has one drawback. Applications for HELOCs and refinances typically take a long time to process.

Rental of Solar Energy

This service is available on a PPA basis. It is concluded between the company that supplies the solar systems and the consumer. This document provides for the use of solar electricity to power the home's systems, but without transferring ownership of the structures. This means that the owner of the solar systems is a third party and you only have the right to consume electricity.

The only advantage of this solution is the low initial investment. You will only need to pay for the consumed volume of the company. This will allow you to save about 15-30% of monthly payments on utilities. Among the shortcomings, it is worth highlighting the lack of ownership of solar systems, problems in the process of selling real estate with installed systems, as well as the lack of access to financial incentives.

How To Determine the Return on Investment in Solar Systems?

Considering the financial component of purchasing structures, everyone wants to know whether they will be a profitable solution. To determine this in each specific case, you need to pay attention to several aspects:

        Cost of current accounts


        Payback period

        The required size of solar systems

Designs will be most effective in places where there is enough sunlight. That is why, before purchasing, it is worth analyzing the climate and weather conditions in your region. The volume of consumption and its cost are also important, as this will help determine the feasibility of investments. If difficulties arise in the process of analyzing these indicators, then you can turn to an experienced solar company manager for help.


Homeowners who want to evaluate the benefits of using solar systems can take advantage of various financing options. The simplest of them is the purchase of structures at one's own expense. It is enough to pay by card or cash. In addition, you can choose from a refinancing program, a HELOC, a solar lease agreement, and a loan. To choose the most profitable and affordable option, it is worth studying the conditions in detail, determining the amount of money that can be spent on the purchase, as well as energy consumption requests.

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