Wondering how to stop relying on the electric grid so much, and start harnessing the power of the sun to keep the lights on?
Solar panels are no longer new technology – they’re now a normal, popular way to help power your home. The popularity of solar panels in the U.S. has grown by seventeen times between 2008 and now. Meanwhile, the cost of solar panels has dropped significantly over the years.
However, getting solar panels installed is still prohibitively expensive for many homeowners. Solar panel financing can help you get the energy you want for your home, reducing your monthly power bills.
We’ve put together our top solar financing methods here – read on to learn more!
1. Home Equity Loan.
A home equity loan is a great way to turn the existing value of your home into even more value. When you use this method to finance your solar panels, you’re wisely using the value that’s already in your home.
With a home equity loan, you can take out a loan on the value of your house that you’ve paid off so far. The amount of equity in your home is the total value of your home, minus the amount you still owe on your mortgage. This equity serves as collateral for the loan.
Sometimes, a home equity loan is called a second mortgage. As you save on your electricity bills after the panels are installed, the loan can almost pay for itself over time.
2. Solar Loan.
Since solar panels have become so popular, there are now loans specifically to help homeowners gain access to solar energy.
There are actually quite a few different types of solar loans. You can get them from solar panel manufacturers, and also from traditional lenders like banks. It’s a type of home improvement loan, so solar loans aren’t as new and innovative as they might sound. Home improvement loans have actually been around for a long time.
Solar panel loans are typically installment loans, meaning you’ll pay back the value of the plus interest in monthly installments. The shorter the term, the higher the monthly payment, but the lower the interest.
You can find both secured and unsecured solar loans. Some even have no down payment, making it very easy to get started even when money is tight.
3. Solar Lease.
A solar lease is a little different from a solar loan. With a solar lease, you don’t actually buy the solar panels – you borrow them, and a third party retains ownership. That third party is usually the solar power provider.
There are some benefits to the solar lease. You won’t be responsible for installation costs — the solar provider takes care of those. They also pay to monitor, maintain, and repair the system as needed.
What’s in it for them? There are some tax credits and other financial incentives for having solar panels. When you lease your panels, the provider gets to reap these rewards, not you.
The benefits for you include a small or nonexistent down payment. You’ll agree to a monthly payment amount to keep the lease going. That amount doesn’t change, no matter how much electricity you’re getting.
A power purchase agreement is a slightly different type of solar lease. With these agreements, you’ll pay each month based on the energy produced, rather than a flat monthly fee.
4. Shared Solar Subscription.
You may want to tap into solar panel only to find that your home isn’t right for it. Maybe there’s too much shade, or the roof isn’t properly shaped to support solar panels.
You can buy into a shared solar subscription in your community, or through a third party, in order to still access solar. Although you won’t have the panels on your home itself, this is an ideal option for many people whose homes aren’t suited for solar panels anyway.
5. PACE Program.
The Property Assessed Clean Energy program exists to help people access solar energy easily. You’ll get the loan for solar power from your local municipalities, and pay it back by paying higher property taxes over a decade or two.
You can get this type of loan without a credit check, and without affecting your home’s equity. You might even save more on your monthly energy bills than the total cost of your loan payments each month.
6. Personal Loan.
The beauty of personal loans is that they can be used for anything you need. There are many types of quick loans you can get, even some that don’t require a credit check. These loans come with a wide variety of rates and terms, depending on the type of loan you get an where you get it from.
Is Solar Financing Worth It?
With a number of types of solar financing, the monthly cost to pay back the loan is smaller than the monthly savings on your energy bill. You’ll often still save money by having solar panels, even if you need a loan to get them.
There are a number of solar savings estimators online that you can use to help make your decision. Just plug in the numbers, and find out how much solar panels might help you save.
If you live in the right kind of location, pay high electricity bills, and qualify for tax incentives, solar panels are a good choice for you. With these solar financing options, you can start enjoying solar panels without having to tighten up your budget much.
Getting Started With Solar Financing.
When you’re ready to move forward, the first step is to decide which kind of solar financing is right for your home. This depends on many factors, from your location to your credit score. Once you’ve made your decision, you can start the loan application process.
Do you live in Canada? If so, you might be wondering about whether location affects how to choose your solar system placement. Check out this guide to learn more.
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