Looking to go green but don’t have the green to do it? That won’t keep you from going solar on our watch.
Solar panels and solar energy systems aren’t cheap, so taking a loan or financing them in any way you choose isn’t a bad thing. Many consumers choose to finance. The best part about financing your solar purchase? You won’t have to wait any longer to get solar installed on your home.
Today we’re breaking down all four of the solar financing options that we offer to our Sun Badger customers.
4 Reasons to Consider Solar Financing
There are four reasons why you should consider financing to invest in solar panels for your home:
- In almost all cases, your monthly savings from your energy bill will be more than your monthly loan payment. That means you’ll be saving money from day one.
- The solar energy systems we install often offset 100% of our customer’s energy usage. Where net-metering is allowed we can design the systems to achieve 110-120% of your average energy usage. If you don’t take the loan, you’ll continue to pay for overpriced power.
- Solar loans are similar to other home improvement loans. In these cases, a state might offer to subsidize solar loans providing you with a below-market interest rate.
- As soon as your solar system is installed, you’ll be eligible for the federal solar tax credit. That means money back in your pocket from day one. And, in some cases, interest on solar loans is also tax-deductible. You can learn more about tax credits and incentives here.
In addition to the financial benefits of going solar, you’ll also be doing your part to help preserve the environment. Not to mention, you’ll be adding value to your home or property.
Paying for Solar
When you’re ready to go solar, you’ll have to decide how to pay for it. The most popular options are loans for solar and solar financing.
Bank Financing Solar
Financing solar through a bank is essentially taking out a personal loan that you can use to pay for your solar panels. Some banks and credit unions do offer and specialize in solar specific loans for their customers. Bank loans for a solar panel system will usually range from a 3.5% to 13.24% interest rate, depending primarily on your credit score, lending history, and the size of the loan.
If you have a poor credit score, you can expect a higher interest rate, like with other loans. One way that homeowners are able to secure a lower interest rate is through a home equity loan.
Home Equity Line of Credit
A home equity loan or home equity line of credit (HELOC) is when you leverage your house against the loan. In this case, if you are unable to make payments on your solar panels and need to forfeit the loan, the bank could repossess the solar installation and your home. While these loans do come at a greater risk to the person getting the loan, they are much less of a risk to the bank, which is why home or property owners can secure lower interest rates.
The difference between a home equity loan and a home equity line of credit is hidden right within the name. A home equity loan is a specific amount of money predetermined by you and agreed upon by the bank. When you take that loan, it’s for a specific amount.
A home equity line of credit is when you can draw funds with credit from a bank. A HELOC would be used when you’re unsure of how much money in total you’ll need for a project. After you’ve secured a HELOC, all you need to do is withdraw money when you need it during your project.
Refinancing Your Home
In many cases, solar will qualify as a home improvement project. When this is the case, you can wrap your solar panels into your home’s mortgage by refinancing your home. When refinancing your home, you can expect between a 2 – 5% closing cost on the estimated value of the property. For example, a $300,000 home would be $15,000 in closing costs on the high end.
Solar panels will often cost roughly $10,000 – $20,000, and while you wouldn’t be directly paying for them, you could secure a lower interest rate for your home and wrap your solar panels into the remainder of your home’s mortgage.
Solar panel financing options also include solar specific financing through companies like Sunlight Financial. At Sun Badger Solar, we recommend Sunlight Financial as an excellent way to pay for your solar. They offer homeowner-friendly loans for solar panel systems and home improvements. You won’t have to worry about figuring all this out on your own. Our solar experts can also help you get started in the financing search for your solar project.
Solar panel financing is as easy as contacting the solar company you want to work with and talking with them about your needs. After that, they’ll be able to guide you towards the solar financing option that’s right for you. Learn more about our solar financing options here!
What’s the Best Way to Pay for Solar?
So, which is the best route to take when it comes to paying for solar? The answer is, there’s not a “best” way. It all depends on the person that’s purchasing solar, how much solar they intend to purchase, whether or not they have cash for the project, and if they’re willing to leverage their home or other assets to secure a lower interest rate.
Every home or property owner handles solar financing differently, and that’s okay. It’s important that you work with a solar company that’s willing to meet you where you’re at and help find the best options for you—whether those options be solar loans through third party lenders or a HELOC from your local bank. The company you work with will help you decide on the best loan for your solar panels.
Solar Tax Credit
An attractive aspect of going solar is the money that you can receive on your federal tax return for installing solar. Project costs, including roofing, tree removal, permits, and other costs of choosing solar can make up the total amount of which up to 26% can be claimed towards a credit on your income tax return.
Now, this isn’t a way to pay for your solar upfront, but it is a way that you can save money to put towards your loans or credits. Unfortunately, these tax credits are going away soon. In 2021 you’ll only be able to claim 22%, and in 2022 you won’t be able to claim any tax credits for installing solar. It pays to go solar while the tax credits are still in place.
If you’ve been looking for the right company to install your solar energy system, then look no further. We’d love to help make your renewable and clean energy dreams come true. Sun Badger Solar installs solar energy systems in Minnesota, Wisconsin, Illinois, and Florida. We’re passionate about educating our customers on the benefits of solar both for their bank account and the environment.
Reach out to us today, and we’ll guide you through the process of determining how many solar panels you’ll need on your home and the best way for you to pay for them. We can’t wait to hear from you!