Everything You Need to Know When Getting Solar System Loans

According to a study from the U.S. Department of Energy, solar power could deliver over $400 billion in public health and environmental benefits in the U.S. by the year 2050. 

With the numerous personal, public, and environmental benefits of choosing to use solar panels, many homeowners are figuring out how to make the switch away from conventional power. Unfortunately, while the positives of investing in renewable energy are vast, the costs can often seem overwhelming. 

Are you hoping to invest in solar energy but aren’t sure how you can afford it? Keep reading for everything you need to know about solar system loans to get started on the path to renewable energy today. 

Solar Financing Options

Choosing to switch to solar energy is a decision that will positively impact many aspects of your life but may be challenging to afford initially. Therefore, it’s essential to understand the average cost of solar panels before deciding what may work best for you. 

There are a few options to consider regarding solar financing: power purchase agreements, solar leases, and solar loans. 

Power Purchase Agreements

With a power purchase agreement (PPA), a solar company owns, installs, and maintains your solar system. Then, as a homeowner, you purchase the power it generates at a set price from the company that is typically much less expensive than the local electricity rate. 

Solar Leases

Similar to a PPA, a solar lease is when a business installs an energy system on your property but still owns the system. With a lease, the difference is that you can use the energy generated but only pay the business a set scheduled amount regardless of how much energy you use. 

Solar Loans

Solar panel loans allow you to purchase an energy system and pay it off over time. In addition, unlike with a PPA or solar leasing, you’re able to take advantage of tax incentives because you own the system outright. 

Types of Solar System Loans

There are several types of solar loans available to choose from, depending on your financial situation. Let’s take a closer look at your options:

Home Equity Loans

A home equity loan is a home improvement loan that allows you to borrow against your home’s equity. You’ll receive a lump sum for your solar investment that you’ll repay in installments over a period of time. 

Personal Loans

Credit unions, banks, and other lenders offer personal loans that can be used for installing a solar energy system on your property. While these loans may not be specifically designed for solar financing, if you have good credit, you may qualify for a personal loan that you’ll be able to use for this investment. 

Utility Loans

In some areas, certain utility companies will offer on-bill financing programs. This means you’ll repay your solar loan through payments that are added right to your electric bill.  

PACE Loans

Property Assessed Clean Energy loans are funded due to government programs partnering with private lenders to help families finance their homes for energy upgrades. With this type of loan, you’ll repay the cost of your solar system over a set number of years through the use of your home’s property tax bill.  

The Many Benefits of Solar Power

Consider switching to solar energy if you’re genuinely interested in going green and making your carbon footprint smaller. 

While the benefits of investing in solar power are vast, the costs can seem overwhelming. If this is the case for you, solar system loans can help get your project off the ground and make your environmentally friendly dreams a reality. 

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By Malik