Project Solar partners with a few lenders to offer financing options without prepayment penalties. We also accept any third-party financing, including Home Equity Line of Credit (HELOC) options.
This article will outline the following topics:
- Financing with Project Solar's Partnered Lender
- Option A - Low Overall Cost
- Option B - Low Monthly Payment - Financing a DIY Project
- Financing with an Independent Lender
- Concerning the 30% Federal ITC & Solar Financing
Financing with Project Solar's Partnered Lender
In most instances, we offer two different loan types: Option A and Option B. We've optimized these loan types to tailor to customer needs:
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Option A - Low Overall Cost
Option A is ideal for customers who are looking to pay off their solar loan in a shorter period of time, and it's the option that we recommend most often.
With these loans, your principal financed amount is simply your project's total price. Plus, any early payments will go directly towards the principal.
On average, solar owners pay off their loan within 7 years. Additionally, homeowners typically only stay in the same home for around 13 years, according to a recent study .
Option A will have a higher interest rate, but if you're planning on paying off your system early you can avoid paying excess interest.
For example: If you have a 25 year loan, but you pay off the loan after 6 years, you've avoided 19 years of interest.
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Option B - Low Monthly Payment
Many solar companies offer low-rate loans, which are designed to be attractive at first glance, but in many cases can actually end up costing more in the long run.
This is mainly due to additional costs that cannot be avoided by paying your loan off early (in contrast to Option A). These types of loans can be beneficial in some situations, though.
For customers who are planning to stay in their current home for 20+ years and/or looking for a consistent, low monthly payment, Option B is ideal.
Unlike utility bills, loan payments don't change based on how much electricity you've used per month, and this consistency can be valuable.
You can review your financing choices with our free online calculator, which also provides a video walkthrough of Option A and Option B.
If you've made a deposit and started the process with us, our Customer Experience Team will have access to information about the exact lender and loan options in your area. They can also help you get an application submitted.
Financing a DIY Project
Our financing partners cannot finance DIY projects, so DIY customers will need to pay cash or finance their project with a third party.
This is mostly due to the fact that DIY systems will require payment prior to the shipment of equipment, which does not line up with financing payment schedules.
In the past, some customers have opted to go with a financing company called LightStream for DIY projects or short-term financing alternatives.
Keep reading into the next section for more information on financing with a third party.
Financing with an Independent Lender
If you are a DIY customer interested in financing, you were not approved through a Project Solar partnered lender, or you simply would like different financing options, we also accept any independent financing alternatives.
It's important to note that we treat independent financing as a cash payment on our end, so you will be required to follow the cash payment schedule that is outlined in your contract.
This unaffiliated list of solar financing companies can be a great resource when shopping around: Solar Loan Providers.
I's also a good idea to check with your own bank or credit union; they may have resources available to finance your system, particularly if you are considering a home equity loan or HELOC.
To read more about home equity financing options, check out this article from EnergySage.
Concerning the 30% Federal ITC & Solar Financing
The Federal Solar Investment Tax Credit (ITC) is a tax incentive that can reduce your tax liability by up to 30% of your project's total price.
For more information on the Federal ITC for Solar, check out our article titled The Federal Investment Tax Credit for Solar or this page from the Office of Energy Efficiency and Renewable Energy . As always, Project Solar does not offer tax advice, and we recommend speaking with a tax professional for the full information in regards to tax incentives.
Most financing companies that include options for this federal incentive will structure their loans in one of two ways:
Automatic re-amortization loan structures
Some lenders will automatically re-amortize your loan after you've paid down the 30% credit, or after a specific amount of time.
For example: many companies will re-amortize the loan after ~14-18 months or after you've paid the incentive difference--whichever comes first.
If you use the incentive to pay down your loan, the loan will be re-amortized to keep your monthly payment lower and avoid excess interest.
If you choose to not pay the incentive amount, the loan will be re-amortized and your future payments increased to cover the difference.
Solar combination loans
Other companies will use a solar combination loan. A solar combination loan finances the 30% federal incentive and the remaining 70% cost separately.
70% of the loan is financed for a longer term (~10-25 years), while the remaining 30% is financed for a short term (12-18 months) until you receive your tax credit. Many customers choose to pay the short-term loan in one lump sum.