How to Finance Your New Solar Panels

published Jan 31, 2022
2 min read

Solar power offers various financial and environmental benefits. It can lower your energy bills and increase the value of your property. Sadly, while solar energy will save you in the long run, it requires a substantial initial investment. Installing solar panels can range between $17,000 and $32,000.

But if you’re like most people, you don’ have the money to pay for this energy system upfront. Thankfully, there are many solar financing options to help you go solar. If you are wondering how to pay for your new solar panels, here are four ways to do that.

Save 30% off Your Income for a Few Months

Paying solar panels through cash is arguably the best way to switch to this green technology. You won’t incur the interest and fees charged on loans with cash payments. As such, you will save more money in the long run. Plus, you can budget household and other expenses accurately in the years to come.

However, the downside of cash payments is that the upfront cost is expensive. Even if you include incentives like federal tax credits, you will still pay a high amount for your investment. Approximately $10,000-$20,000. Sadly, not every homeowner can afford this. So, saving months prior, presents a favorable solution.

Unless you urgently need to install solar right now, you can always take time to save to avoid borrowing money. You can set a goal of saving 30% of your income for about five or six months. Even if you will not have met the needed amount for solar installation by the end of this period, your savings will be close to that amount.

Buy Them on Lease

Let’s face it. As much as savings are an excellent solution, not everyone can manage to save. In that case, you can decide to lease your solar panels, which is also another great idea. Many solar panel companies have leasing programs that don’t require any down payments.

They will install the panels for you, and you can start enjoying solar benefits. The only downside is that the ownership remains with the solar panel company. It’ll be the one enjoying solar incentives like tax savings.

You can also participate in a power purchase agreement (PPA). It works the same as solar leases, only that you’ll pay for the electricity the panels produce.

Get an Online Loan

Leasing can look like an attractive solution at first. However, it’s not the best for someone who wants to own solar panels. But ownership can only come through buying. So if you don’t have that money, think of getting an online loan.

A personal online loan, for that matter, can be your best bet. These loans come in different shapes and sizes and charge a lower interest rate. Plus, many online lenders offer unsecured personal loans, which means you don’t have to put anything as collateral.

The best thing about online loans is that they don’t involve rigorous screening. Even borrowers with a low credit score or a not so perfect credit score can apply and get approved. Plus, there are bad credit loans specifically for people with bad credit.

Additionally, online loans feature a fast application and approval. Thus, suitable for those who want to install their panels as quickly as possible. The only drawback with these loans is that they come with higher interests. Also, most lenders only offer a small amount that may not cater for the whole solar installation.

If you are considering an online loan, shop around for different lenders. Compare their interest rate, loan terms and the amount they offer to decide the best lender for your budget and needs.

If You Get Declined for a Loan – Borrow Money from Relatives

It is one thing to apply for a loan and another to get approved. Loan applications can and are declined sometimes. Note that lenders have specific eligibility requirements that you must meet. If you don’t, your applications will not be successful. If that is the case, you don’t have to give up on your dream of going solar only because you were declined for a loan.

There’s another bullet you can dodge. That is, approaching family members for a loan. Such kind of a loan is known as a family loan. It is less formal and doesn’t include interest or repayment schedules, most of the time.

Borrowing from a family member makes more sense since you wouldn’t be forced to pay interest unless that is your initial agreement. No one will scrutinize your credit to evaluate your history and score.

But you have to be careful as any conflict can ruin your relationship. Therefore, make sure that you agree on the amount you’ll pay back, how you’ll repay it, and what happens during the days you can’t afford to make the payments. Should any issue arise, you will have somewhere to refer to.

Final Thoughts

The above are the ways to finance solar panels. The best way for you depends on your needs and situation. Therefore, consider what is best for you before choosing any financing option.