Solar Financing Companies: What You Should Expect | With two million and counting residential and commercial solar panel system installations in the US, you might think it’s time for your home or business to go solar. There are certainly plenty of benefits, such as lower electricity bills, reducing greenhouse gases, and even boosting home values.
The big hurdle for many homeowners and business owners is the cost of a system. After all, the average residential system clocks in at around $24,000. Commercial systems vary a lot and can cost anywhere from $50,000 up to $500,000 or more.
Prices like that mean financing. So, what can you expect from solar financing companies? Keep reading and find out what you need to know.
What is a Solar Loan?
Solar financing or a solar loan is a loan taken out specifically for the purpose of buying and installing a solar panel system. These types of loans are usually offered as a variation on a home improvement loan.
They let you invest in solar power without taking a huge financial hit at the outset.
Commercial solar financing is a different animal and may involve a power purchase agreement or leasing. You should consult with a rep from a local solar company, such as Blue Raven, for information and options.
Loan Types
Your standard solar panel financing will use either secured or unsecured loans. Secured loans use some form of collateral, most often your home. Unsecured loans use your credit score and income as the deciding factors.
Interest Rates
Solar financing rates will vary from company to company and by loan type. For example, secured loans that use your home as collateral typically offer lower interest rates. These are often comparable to mortgage interest rates.
Unsecured loans typically draw higher interest rates, with some equal to high interest rate credit cards. You’ll want to shop around for the best interest rates available to you.
Repayment Terms
You should always dig into the repayment terms of any residential solar financing. For example, a financing company might offer good interest rates but expect a very long repayment timeline. That drives up your total interest and becomes profit for the lender.
On the other end of the spectrum are companies that offer financing but impose very short repayment timelines. You want a company that offers some flexibility.
The ultimate goal is for you to end up with repayment terms that don’t strain your budget, but also let you avoid paying a lot of excess interest.
Solar Financing Companies and You
As a general rule, you should approach solar financing companies the same way you would approach finding a mortgage lender. Do a lot of research before you commit.
Compare things like interest rates and repayment terms. See what kind of secured or unsecured loans you qualify for several companies. See which companies come closest to meeting your ideal loan terms and pick from those options.
Looking for more tips on home improvement and eco-friendly renovations? Check out some of the other posts over in our Property and Construction category.
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