Don’t have the cash to pay for solar panels? See if there’s a financing option available that fits your needs.
Thinking about going solar for your home? There’s a lot to be excited about — being more energy-efficient, reducing your carbon footprint and potentially shaving a few dollars off your power bill each month.
But something that’s not so exciting? The price tag. While prices have dropped dramatically over the last decade, a rooftop solar system will still cost you thousands. The national average cost of an 8 kW is $31,558, according to data from FindEnergy. And that’s before incentives and rebates are applied.
It’s certainly not pennies, but it’s a purchase that could pay for years to come in lower utility bills and a lower carbon footprint. To figure out which financing option is best for you, figure out your priorities and budget.
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« Is it the environmental impact or money savings, or both? » said Krystal Persaud, co-founder of Wildgrid, a company that helps people adopt clean energy at home.
If you’re mulling over making the switch to using renewable energy to power your home, this solar financing guide will walk you through your options for covering the costs.Buying solar panels with cash
It’s true that cash is king. If you have that money sitting in the bank, just like with any other home improvement projects, you might want to pay for solar panel installation in full. The major benefit is that you won’t have to worry about monthly payments and paying any interest or fees. However, it will take some time to break even. For instance, if you bought a solar panel system for $30,000 that completely offsets your average annual energy usage of $3,000, it will take 10 years to recoup the cost.
« Because paying for solar with cash is for the wealthiest people, it’s not the most common route, » Persaud said. « But it is the most affordable way in that you don’t owe any interest. You pay for it and you’re done, and the extra energy you make is yours. » Buying solar panels with a solar loan
While this option might be more common for homeowners who want to go solar, it is also a little more tricky to figure out. That’s because solar loans aren’t as common as home equity lines of credit or personal loans, and the rates and terms aren’t as transparent.
According to the Clean Energy States Alliance’s homeowner’s guide to solar financing (PDF), solar loans are usually from solar companies themselves or third-party financial institutions that work with solar installers. Interest rates can vary widely based on a number of factors that include:
The good news with financing your home solar panels is that you can still take advantage of any solar energy and rebates. However, there are some things to watch out for. For instance, some loan agreements include interest-only payments for the first year in order to give you time to get the rebates and incentives to put toward the loan. While this might make for low monthly payments to start, the loan payments may be higher for the rest of the loan.
Also, part of that loan amount will be the salesperson’s commission.
« In that, say, $20,000 quote, look at the commission, which can be as high as $5,000, » Persaud said. « And always negotiate. Your discount might come from their commission, and the salesperson might be willing to take it out of their cut to get to close the deal.
