{"id":6208,"date":"2017-03-28T11:14:07","date_gmt":"2017-03-28T11:14:07","guid":{"rendered":"https:\/\/www.portal.solar.com\/learn\/affordable-solar-loan-providers-financing-purchasing\/"},"modified":"2022-07-26T10:05:17","modified_gmt":"2022-07-26T10:05:17","slug":"affordable-solar-loan-providers-financing-purchasing","status":"publish","type":"post","link":"https:\/\/www.solar.com\/learn\/affordable-solar-loan-providers-financing-purchasing\/","title":{"rendered":"Affordable Solar Loan Providers"},"content":{"rendered":"

The first homes to install modern photovoltaics were in the 1960s. \u00a0These early adopters were pioneers in alternative home energy. \u00a0They took a risk of installing new technology. \u00a0Costs were high and paid in cash. \u00a0Lucky for them, their financial investment paid off. \u00a0Those sturdy panels are still producing to this day.\u00a0<\/span><\/p>\n

Since those first systems were purchased with cash, the industry has grown and evolved. \u00a0The solar financing industry has grown parallel to the mass adoption of home solar systems. \u00a0As more people are looking into alternative energy options for their homes, more financial\"go institutions are seeing opportunity. \u00a0<\/span><\/p>\n

Over the years, trends in solar financing have come and gone. For the first 5 years of this decade, the prevalence of Leases (also known as Power Purchase Agreements) rose to prominence. \u00a0The solar installation company owned the solar system and simply sold the power to the homeowner at a lower rate than their current utility. \u00a0This was a great way to have solar on your home without any initial cash outlay. \u00a0Additionally, homeowners could see immediate monthly savings making it appealing to many.<\/span><\/p>\n

However, solar leases are not able to take advantage of the 30% Federal Incentive Tax Credit (ITC). \u00a0Only those who purchase and own the system can receive that credit. This reality has led to a decline in leases and PPAs over the last two years.<\/span><\/p>\n

Financial institutions saw an opportunity in this coverage gap – they could finance the purchase of a photovoltaic system entirely, and allow homeowners to take advantage of the Federal ITC. \u00a0For many solar-minded homeowners, this is the best of both worlds.<\/span><\/p>\n

In the current solar market, there are many new solar financing options available. There are options for those with low credit scores, those with some cash to put down, those who want to pay off their loan quickly, those who want greater immediate savings, etc.<\/span><\/p>\n

Here’s a solid foundation for the available solar funding options out there. Check out our comprehensive guide on how to finance solar panel installations<\/a>.<\/p>\n

PACE Solar Loans<\/strong><\/h2>\n

In the U.S. today, there is a program called PACE (Property Assessed Clean Energy). \u00a0It is a government assistance program – which varies state to state – which is aimed at making solar more accessible to lower income or credit challenged households. \u00a0PACE allows homeowners to use their home as collateral to finance their solar system. \u00a0\"imgres.jpg\"<\/span><\/p>\n

Note, finance rates are higher for this type of loan. Therefore, it is typically not a good option unless all other routes have been exhausted. \u00a0If your debt to income ratio is not optimal, a PACE loan might be the right choice to go solar. PACE financing still pencils out for many homeowners with sky-high utility bills.<\/span><\/p>\n

One main benefit of financing through PACE is that, should the home be sold, the balance of the solar loan transfers to the new homeowner. \u00a0It is a relatively simple process for both the seller and the buyer.<\/span><\/p>\n

Examples of PACE programs in California include:<\/span><\/p>\n

    \n
  1. HERO<\/strong> <\/span><\/li>\n
  2. Ygrene<\/strong> <\/span><\/li>\n
  3. CaliforniaFIRST<\/strong> <\/span><\/li>\n<\/ol>\n

    Each of these financiers has very similar loan structures and terms but varies slightly with interest rates and serviceable areas.<\/span><\/p>\n

    For a more traditional loan – where your house is not used as collateral – there are three separate options: re-amortized loans, combo loans, and SREC loans.<\/span><\/p>\n

    Re-amortizing Solar Loans<\/strong><\/h2>\n

    Re-amortizing loans are independently financed through a financial institution. \u00a0This loan type allows a homeowner to re-amortize their loan \"logo-1.jpg\"once. Most homeowners use their tax credit amount to re-amortize the loan at tax season the following year. However, a homeowner does not have to re-amortize with their tax credit. Technically, this loan option can be re-amortized whenever and with any amount of money.
    \n<\/span><\/p>\n

    A typical lien is not placed on the home. \u00a0Home liens can be a problem for some homeowners. Rather, a UCC1 fixture filing is placed on the solar system itself to secure the loan. \u00a0This is often viewed as a safer, more prudent alternative to a home lien.<\/span><\/p>\n

    Examples of Re-amortizing Loan Financiers:<\/span><\/p>\n

      \n
    1. Matador<\/strong> <\/span><\/li>\n
    2. San Diego Metro Credit Union<\/strong> <\/span><\/li>\n<\/ol>\n

      Combo Solar Loans<\/strong><\/h2>\n

      Much like re-amortizing loans, combo loans are independently financed. \u00a0The main difference is that (in lieu of reamortizing a single loan) there are two separate loans. The first loan is for 70% of the contract price, which has an interest rate (for which the homeowner qualifies). The \"mosaic.png\"
      \nsecond loan covers the remaining 30% of the contract price. This second loan is meant to equal the federal tax credit amount and typically lasts for 18 months with 0% interest. If this amount is not paid off in that allotted time frame, the balance adopts the same APR as the first loan, whatever that may be.<\/span><\/p>\n

      The main advantage to a combo loan is that the homeowner starts off with a lower monthly payment as compared to a re-amortizing loan. This can be helpful for homeowners where consistent solar loan payments are helpful for budgeting purposes.<\/span><\/p>\n

      Examples of combo loan financiers:<\/span><\/p>\n