Solar financing is an important part of your solar panel installation.
The way that you decide to pay for your solar panels can have a big effect on your return on investment (or ROI for all you financial experts).
If you’ve got the cash available to pay for your sleek new solar panels up front, that’s excellent!
You may still want to check out your options, however, in case you could finance your panels and invest that money elsewhere.
If you don’t have the money in the bank to pay for your solar panels right this second, have no fear: You are not alone and there are more ways than ever to finance your solar panels.
Banks and lending institutions are getting comfortable with the idea of lending money for the purchase of solar panels.
(Of course this comfort level varies based on location and is not a guarantee of a loan.)
Having banks even consider lending money for solar electric panels is an improvement, however, and just one of the ways you can go solar sooner than you think.
Your main options for solar financing are:
- A Solar Lease – This is an option made available by some solar companies like SolarCity. A solar lease makes it possible for you to get solar panels with no money down and allows you to start saving money on your electric bill from day one. Also, since the solar leasing company is the owner of the solar panels, they are usually responsible for monitoring power output and performing any necessary repairs. When the lease is over you usually have the option of extending the lease or having the solar panels removed.
- Energy Efficient Mortgages – This is a federal government program available in the United States that enables people to get a mortgage for making energy efficiency improvements to their home. Since the loan is insured by the federal government, it can work for people who would otherwise not be able to acquire financing.
- Power Purchase Agreement – A power purchase agreement (PPA) is similar to a solar lease in that a company owns and maintains the solar panels on your roof. The difference is that instead of making a monthly lease payment, you purchase the power produced by the panels at a preset rate.
- Bank Loans – As mentioned earlier, banks are now willing to offer loans for the purchase of a solar power system. These loans can be secured (usually by the equity in your home) or unsecured. Consult a tax expert to find out if interest on the loan is tax deductible.
- Local Government Loans – This one is my personal favorite. Some municipalities will lend you money to install solar panels and allow you to pay the loan back through an increase in property taxes. I especially like this one because of how simple it makes a move. If you decide to move, the solar panels stay with the house and the new owner takes over the property tax payments (agreements may vary, so do your homework). If your local government offers this type of loan, I recommend checking it out.
So if you want solar panels but you don’t have the money in the bank, check out these solar financing options and see which one works best for you.
And look on the bright side: There have never been so many people willing to lend you money to go solar.