The Best Solar Financing Options for Homeowners
What Are the Main Solar Financing Options?
Solar financing has three primary options: solar loans, solar leases, and power purchase agreements (PPAs). Each option has its own set of advantages, and your choice will depend on your financial situation, credit score, and long-term energy goals.
Solar Loans: The Most Common Solar Financing Option
Solar loans are the best solar financing choice for homeowners who want to own their solar system outright. These loans allow you to spread out the cost of your system over several years, typically with fixed monthly payments. Solar loans often come from banks, credit unions, or specialized solar financing companies.
Benefits of Solar Loans:
- Ownership of the system: You’ll own the solar system once the loan is paid off, increasing your home’s value and offering long-term savings.
- Federal Tax Incentives: As the owner, you’re eligible for federal tax credits, including the 30% Solar Investment Tax Credit (ITC).
- Low Interest Rates: Credit unions and banks often offer competitive interest rates for qualified borrowers, especially those with good credit.
Things to Consider:
- Higher Credit Requirements: To qualify for the best rates, you’ll likely need a good or excellent credit score.
- Long-Term Commitment: The loan terms can range from 5 to 25 years, so be prepared for a long-term financial commitment.
Curious about what your monthly payments might look like with a solar loan? Get a free quote from one of our expert solar consultants today.
Solar Leases: An Affordable Way to Go Solar
For those who want the benefits of solar power without the responsibility of owning the system, a solar lease could be a great solar financing option. With a lease, a third-party solar company installs the system on your home, and you pay a fixed monthly fee to use the energy it generates.
Benefits of Solar Leases:
- Low Upfront Costs: Leasing typically requires little to no upfront payment, making it accessible for many homeowners.
- Maintenance-Free: Since the solar company owns the system, they are responsible for any repairs or maintenance.
- Guaranteed Savings: Lease agreements often guarantee that you will pay less for energy compared to your current utility rates.
Things to Consider:
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- No Ownership: Since you don’t own the system, you won’t be eligible for tax incentives or increased home value.
- Fixed Payments: While the monthly lease fee is generally lower than your utility bills, you’ll still be paying for energy over the life of the lease, which can last 20 to 25 years.
Want to see if a solar lease is right for you? Contact us for a custom solar assessment today!
Power Purchase Agreements (PPAs): Pay for the Power, Not the Panels
A Power Purchase Agreement (PPA) is similar to a lease, but instead of paying a flat monthly fee, you pay for the actual energy your solar system produces. This can be a good solar financing option for homeowners who want to avoid upfront costs and still benefit from lower utility bills.
Benefits of PPAs:
- No Upfront Cost: Just like with a lease, you don’t pay anything upfront for the solar installation.
- Pay for What You Use: Your payments are based on the amount of energy the system produces, offering flexibility.
- Maintenance-Free: Since the solar company owns and maintains the system, you won’t have to worry about repairs or upkeep.
Things to Consider:
- No Ownership: As with leases, you won’t own the system or benefit from tax incentives.
- Escalation Clauses: Some PPAs include escalation clauses, meaning your per-kilowatt-hour price may increase over time.
Interested in seeing how much you could save with a PPA? Get in touch for a free consultation and find out more.
Why Credit Unions Offer Some of the Best Solar Financing Loans
When considering a solar loan, credit unions often provide the most competitive interest rates compared to traditional banks or specialized solar lenders. However, they may have stricter credit requirements, making it harder for some homeowners to qualify for the lowest rates.
Benefits of Credit Union Solar Loans:
- Lower Interest Rates: Credit unions are known for offering some of the best interest rates in the solar financing market.
- Flexible Terms: Many credit unions offer flexible loan terms, allowing you to choose between shorter or longer repayment periods based on your financial situation.
- Local Service: Credit unions typically offer more personalized service, making the process smoother for their members.
Things to Consider:
- Higher Credit Standards: While the rates are attractive, credit unions may require a higher credit score to qualify.
- Membership Requirement: Some credit unions require you to be a member, which may involve meeting certain geographic or employment criteria.
Looking for low-interest solar loans? Find out if you qualify for solar financing through one of our partnered credit unions.
How Solar Financing Saves You Money in the Long Run
No matter which financing option you choose—whether it’s a loan, lease, or PPA—going solar is almost always more affordable than sticking with your utility company. Here’s why:
- Lower Monthly Payments: Solar financing options are structured to ensure your monthly payments are lower than your current utility bills.
- Fixed Rates: Unlike utility rates, which often increase over time, solar loans, leases, and PPAs usually offer fixed or predictable payment terms, protecting you from rising energy costs.
- Increased Property Value: Homes with solar panels typically sell for more, and you’ll enjoy that benefit if you opt for ownership through a loan.
- Tax Incentives and Rebates: If you own your system, you can take advantage of federal and state tax credits, which significantly reduce the overall cost of going solar.
Ready to start saving on your energy bills? Get a free quote and find out how much you can save by going solar today!
Conclusion
Choosing the best financing option for your solar system is an important step toward energy independence and long-term savings. Whether you prefer the ownership benefits of a solar loan, the low upfront costs of a lease, or the flexibility of a PPA, there’s a financing solution that fits your needs. Keep in mind that no matter which option you choose, you’ll almost always save more with solar compared to relying on your utility company.
Take the next step today—contact us for a free consultation and see how much you can save by switching to solar power.
