There are now a variety of solar loans that allow solar shoppers to install a system for no money down! These loans do have associated fees that get passed down to the customers, but can still result in significant cost savings over time.
Until recently, solar leases were a very popular way for homeowners to go solar. For as little as no money down, a family could get a solar system installed on their roof.
In some areas, this would result in lower energy prices from day one.
Now there are more financing options to many households which have caused solar leases to become less popular. Some solar installers offer third-party financing, often at a reasonable rate.
In ideal circumstances, the reduction in energy costs is greater than the loan payment, making the system cash flow positive from day one.
The financial outlook for a solar system with a solar loan depends on several factors:
1. Total cost of the solar system (after incentives)
2. Price of energy that the solar system displaces
3. Expenses of the solar loan (fees and interest)
4. Length of the loan
5. Tax implications of different loans
When the cost of energy is higher, it is easier for solar to be competitive economically. For example, solar power is more popular in Hawaii and California, largely due to high electricity costs.
This makes it easier for people to save money right away when financing a solar system.
Of course, the expenses incurred from financing the solar system are an important consideration. Many solar loans have fees absorbed by the solar installer or the customer in addition to the interest rate.
In the past, some solar installers did provide solar loans, but typically for short terms. Now, the term of many of these loans is around 12 years.
Having a longer term makes it easier for the system to be cash flow positive from day one. After the loan is paid off, the solar system will provide free power for a couple decades.