Are you interested in solar panels but dread the thought of financing them?
The good news is that the cost of solar power is on a downward trend. Over the past decade, the cost has dropped by over 80%.
However, the current prices might still be out of reach for some homeowners. For this group, financing options are available to make solar power more affordable.
But what are these financing options? And which one is best for you? Here are four options for financing solar installation that every homeowner should consider:
1. Solar Loans
Solar loans are one of the most popular ways to finance solar installation. With a solar loan, you can spread the cost of your solar panels over a period of time, usually between five and 20 years.
The interest rate on a solar loan is typically fixed, which means your monthly payments will stay the same over the life of the loan. This makes budgeting for your solar panels easier and gives you peace of mind knowing that your payments won’t fluctuate.
There are two types of solar loans: unsecured and secured. An unsecured loan doesn’t require any collateral, while a secured loan does.
Secured loans usually have lower interest rates than unsecured loans, but they also come with more risk. If you default on a secured loan, the lender can seize your collateral, which could put your home at risk.
2. Solar Leases
Solar leases are another popular financing option, especially for homeowners who don’t have the cash to pay for solar panels outright. With a solar lease, you make monthly payments to a solar company in exchange for the use of their panels.
The term of a solar lease is usually 20 years, and at the end of the term, you have the option to buy the panels or have them removed. Solar leases typically come with escalator clauses, which means that your monthly payments will increase over time.
This might sound like a bad thing, but it’s actually good for two reasons. First, it allows you to lock in today’s low rates for the length of your lease. Second, as panel technology improves over time, you’ll be able to take advantage of those improvements without having to pay for them upfront.
3. Solar Power Purchase Agreements
A solar power purchase agreement (PPA) is similar to a solar lease. You make monthly payments to a solar company in exchange for the use of their panels.
However, there are two key differences between PPAs and leases. First, with a PPA, you only make payments for the electricity that your panels produce, not for the panels themselves.
Second, there is no option to buy the panels at the end of the term. Instead, you simply have them removed. Solar PPAs are typically 20 years in length.
4. Solar Rebates and Incentives
Solar rebates and incentives are offered by state and local governments to encourage homeowners to install solar panels. These programs can significantly reduce the cost of your solar installation.
These programs are typically first-come, first-serve, so if you’re interested in taking advantage of them, it’s important to act quickly.
You might also be able to take advantage of federal tax credits for solar installation. The Residential Renewable Energy Tax Credit offers a credit of up to 26% as part of residential solar installation financing.
Finally, if you’re thinking about residential solar install on your home, you can benefit from working with companies that don’t ask for any upfront installation charges.
Your Options for Financing Solar Installation
These are just four of the many options available for financing solar installation. The best option for you will depend on your unique circumstances.
If you’re considering solar panels for your home, be sure to explore all of your financing options to find the one that’s right for you.
For more information on the best way to finance solar panels, be sure to read our other articles posted on the website.
David Klemow