5 Best Ways to Finance Solar Panels
Interested in switching to solar? It seems to be a hot topic and you think it would be smart to do it. The big thing are the finances that will enable you in doing do. There are several ways you could pay for your panels, and each of them has its benefits. Here are 5 of them, explained:
1. Secured solar loan or HELOC
A secured loan or Home Equity Line of Credit (HELOC) may be one of your best options, as you can compare it to a small business loan where you are positive that the business will flourish. That’s because solar panels are guaranteed to work, which will save you money on your utilities.
Another reason why HELOC may be the best option is that you can get the rate that is around 5% or even lower, and that will result in lower monthly payments.
Your second option as to secured loans is PowerSaver Second Mortgage where the rate goes around 5%. The third kind of secured loan you could ask for is Property-Assessed Clean Energy (PACE). There are a few other companies that offer secured loans, but their rates go up from 7%.
2. Unsecured solar loan
An unsecured solar loan is pretty similar to a secured solar loan which you could ask from certain banks and solar companies. However, as they are unsecured, their rates are mostly higher and terms shorter.
Unsecured loans are quite a good deal because they are easier to get compared to secured ones. Another upside is if you get it from a solar company, you might get some other perks within the offer.
3. Solar lease or PPA
Getting a solar lease or PPA (Power Purchase Agreement) means switching to solar for $0 down, but you will have to make payments each month. The results are lower electric bills from the very start.
What this means is that a solar company is now your second utility provider, but the electricity from them is cheaper than what you would pay your regular electricity provider. You will save 10%-30% on your bills.
If getting a loan is a challenge to you because you don’t have income or don’t have a lot of equity, this could be a perfect solution for you.
Back in the day, this was the only option that you had. This is also an option that leaves you completely free, without any additional interests, etc. Paying for your solar panels up front means that you are eligible for tax credits, rebates, etc.
This also means that once you buy the solar panels, you own them and the energy they produce.
Yes, it does cost money when you need to give it all at once. However, if you’ve been saving some money and have it at your disposal, this could be a pretty sweet deal. And of course, with rebates, federal tax credit, and electric bill savings, it really does pay off.
5. Personal loan
This should maybe be your last resort. If you’re in a state where you can get solar leases or PPA, your loans could have an interest rate higher than 8%. Of course, that’s no good.
Low credit card rates seem to be the biggest problem here. It might be even around 11%, which is far from ideal. That means that your monthly payments could be about $200 per month.
However, taking a personal loan is similar to paying up front. And they are pretty easy to get too. You can count on the rebates, tax credit, electricity bill savings, etc. However, with an interest rate at 11%, your returns won’t be as significant as they would be with all of the above-mentioned options.
If you are thinking about switching to solar, explore your options thoroughly and choose the one that works best for you. It is not the same for everyone.
However, whichever option you decide to take, you’re in for longtime savings.