Solar Financing Options

A Note to our visitors:
We are currently renovating this page, shoveling vital information on to it as fast as we can. Please forgive us if things seem a bit messy. So many people have a need for payment information, so we’ve decided to keep this page up even while we renovate it! Pardon our dust!

How you decide to pay for your solar system can be just as important as how much you pay.  A solar financing option that isn’t right for you can mean you end up paying way more over the life of the system. We’d like this little page to be a resource for you. A place where real people can go to get real straight up information about how they should pay for their solar. We will keep this page updated with the latest solar financing info, and we hope you find it helpful!

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Home Equity Loan as a Solar Finance Option

One option is to take out a home equity loan or line of credit to finance your new solar system. You’ve got home equity loans (HELs) and Home Equity Lines of Credit (HELOCs). Lets talk about what the two have in common. Both are secured against the equity you have in your home. This in an important thing to remember.

HELOCs are a variable rate, so the payment can change. They can be drawn upon as you go, so you’re not on the line for the whole amount you get approved for until you use it.

HELs are usually variable rate just like HELOCs. They are generally issued to you all at once as a lump sum.

Pros

  • Puts the equity just sitting in your home to work immediately, which is especially powerful with solar.
  • Solar systems often return over 15% on the value put into them, and you own that asset. If you’re looking for an investment to put your homes equity to work in, this is one of the best out there!

Cons

  • You may not be interested in leveraging your home to gain credit.
  • May require a high credit score to be approved.
  • These are usually variable rate agreements, so if interest rates were to rise, your payments could go up.

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What about Cash

Cash is a great way to go, because it allows you to maximize the benefits of solar by paying for the system out right, and avoiding the additional interest and fees associated with a loan. You’re providing your own solar financing and that’s a great way to go. A cash deal also means you own your system out right, which can add considerable value to your property. There are many cases when the value a system adds to a home, actually pays for the system! Cash is king…but do you just have it laying around?

Pros

  • If you have the money now, this could be one of the most powerful purchases you ever make. We’re excited for you…but if you don’t believe us, just do the research. If you have a significant energy bill, getting solar is a game changer under most circumstaces. If you’re able to do it without using a loan, it’s like your favorite icing on the best cake, and you get to eat it too.
  • The power is in you hands, no middle men or approvals coming between you and your solar.
  • The cheapest way, because you pay no interest or fees associated with financing.
  • The cheapest way again, because certain contractors might be willing to give you a discount when you pay with cash.
  • Adds value to your property, often significantly offsetting the cost of the solar system itself.

Cons

  • You may not have all that cash ready to go when you are ready to buy
  • You might want to hang on to some cash so you can stay liquid. In other words, financing might be a more flexible option for you.
  • Waiting until you have the cash saved to buy a system might mean you miss out on incentives that are about to expire.
  • Time has a value too. If you want solar, every month paying your electricity bill is a loss. The monthly interest on a loan may be much smaller than that bill, in which case, you’re better off getting into solar as soon as you can, so a loan might be a superior solar financing rout in this case.

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Bank Loans Specifically Tailored for Solar Financing

There are low fixed-rate loans designed specifically for solar projects
for County of San Diego homeowners. San Diego Metropolitan Credit Union’s Solar Loan Program
is one of the only solar specific loans available in southern California. We happen to be friends, and we can arrange a meeting! The great thing about these loans is they are fixed rate loans, which might be exactly what you are looking for.

Pros

  • Low fixed rate…Once you’ve agreed to the payment, it will never go up.
  • Competitive APR.
  • Funds your project immediately in one lump sum payment.
  • Owning your solar system will likely add significant value to your home.
  • Some of the Funds may be used for upgrades to your home related to the new solar system.

Cons

  • You will have to be approved of course, and lower credit scores can be an issue.

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The Hero Program

The HERO Program is a fixed rate, low cost loan that is paid over a term of 5, 10, 15, or 20 years through your property taxes. It essentially works like any other fixed rate loan, with one very big difference. The payments will show up on your property tax bill as an assessment. The results: A hero loan does not show up on your credit report, and the interest on your loan payments may be written off each year, exactly like property taxes…pretty cool right?

Pros

  • Credit Score is not an issue
  • The interest you pay on your solar system may be written off
  • One of the quickest and easiest application processes out there. Approval in less than an hour in many cases
  • A hero loan does not show up or effect your credit report..it’s like the invisible man of loans.
  • A hero loan can also be used for other energy efficient upgrades, like new windows or a more efficient Hvac system.
  • Your first payment is often deferred for several months.

Cons

  • You must have 10% equity in your home.
  • You must not have had a bankruptcy in the last 24 months.
  • You may be denied if you missed multiple property tax payments in the last 3 years.

 

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Solar Loans Available through our partners at San Diego Metropolitan Credit Union