Solar Loans

photo courtesy of solarcity.com

A solar panel system is not only good for the environment but also an investment. There are many ways to get your home into a solar system. The first being a cash purchase, the second is utilizing a loan, the third is a solar lease. The video I've attached shows loan options that allow home owners to purchase solar panels. Many of these options can be zero down or a variable down payment with monthly payments thereafter. Once the size and cost of the solar system is determined then purchasing options should be reviewed to determine what is best. If you can pay cash great but if not, a home equity loan or a low interest unsecured loan may be an option. Unsecured loan rates can be as high as 10% APR but with a good credit score can go as low as 1% APR, if you qualify. Oftentimes a secured loan will be the best option if the applicants credit score is so-so. This will allow for a lower interest rate than an unsecured loan. The loan terms can also be flexible. The useful life span of solar panels ranges from 20-30 years and panels can continue to produce energy beyond that. 

We decided to go with a low interest unsecured loan. This option was less hassle and, for us, offered a comparable interest rate to a home equity loan. Because our purchase qualified for the Green Energy credit on our Federal Tax Return the loan was split into a 70% / 30% loan. The 30% portion is no payment, no interest for a year. After one year this loan is subject to the regular loan terms if not paid in full. This allows for tax returns to be filed so that the loan can be paid off. The 70% loan is termed for 12 years but broken into 139 payments to give 4 months deferment. This is because a solar system can take several months to install due to various reasons. Some delays we experienced DTE permits, weather, DTE communication delays and finally DTE delays going live. Ultimately our loan payment & electric will be roughly what we paid for just our electric because we chose a shorter loan term. Our savings will increase as the cost of electric increases. The faster this happens the more we save. In Michigan electric costs have risen pretty consistently at just under 5% every year since 2012. I normally post blogs from my phone but I will try to see if I can post the excel calculator I created from my computer. It allows you to plug in specific information, including the electric rates and determine savings due to varying factors over the useful life of a solar panel system. 

There are differences between solar loans and leases the primary being you own the panels you have a loan on. With a solar lease you do not own the equipment and it will eventually go back to the leasing company. Also a purchase will increase the value of your home by up to 10 times the annual utility savings. A lease will add value to a home but not near as much as a system that is owned.

So check out this helpful video regarding solar purchases. Also I cannot encourage you enough to check out the website www.energysage.com, Again I highly recommed it. Energy Sage helped us so much on our solar panel journey.