The largest advancements in solar over the past decade that benefits you have been in financing options, rather than the technology. If you are able to use the tax credits for going solar, a loan is usually the financing option that will save you the most money. Solar panel loans now are the most popular way fellow Americans pay for a home energy upgrade.
The increased adoption of solar through PV loans and cash purchases was due to several factors, including declining PV system costs, more widespread loan availability, and changing business models of national installers, among other reasons.
We have partnerships with financing companies, credit unions, and banks that give you the option to receive a loan to pay for your solar energy system.
With a personal loan, the lender holds no collateral but instead makes the loan based on your credit quality, income, and debt level. This type of financing can be closed more easily and quickly than other loans. Interest rates may vary and terms are typically shorter than those of solar loans or secured loans. In addition, personal loans are usually only available to borrowers with good credit or a high income and with limited outstanding debt.
Many solar loan providers secure the loan through a UCC-1 filing, which gives notice of the lender’s security interest on the solar equipment, but importantly not on your home. The UCC-1 filing gives the lender certain rights, such as repossession of the solar until the loan is repaid. Lenders consider solar loans with UCC-1 filings as more secure than personal loans. You will often see lower interest rates, longer-term options, and more relaxed credit and income qualification requirements on these types of loans, compared to other financing options.
Home Equity Loans and Lines of Credit
Solar financing can be secured through a home equity loan (also referred to as second mortgage) or a Home Equity Line of Credit (HELOC). Like other real estate loans, they require a closing, or settlement, at which all parties sign the necessary loan documents. To get to closing, the real estate agent typically is appraised to ensure the owner has sufficient equity in the property, the loan is registered with the county clerk, and taxes are evaluated. This is a heavily regulated process, particularly since the recent mortgage crisis. Obtaining a real estate loan requires time and money, but borrowers may get a relatively low rate compared with the rates of other types of loans.
Property Assessed Clean Energy (PACE) Loans
PACE loans are an option only available to California residents. PACE financing is a public-private partnership that provides you with the funds to make upgrades to your home, including solar panels, roofs, insulation, windows, heating, cooling, and other home efficiency upgrades. The financing is paid back through your county property taxes, which means that the interest may be deductible on your income taxes, much like mortgage interest. FICO score is not a determining factor for financing approval and terms range from 5 to 30 years. PACE loans are available in areas where the local government has opted into a PACE program.