Solar loans can fund both the equipment and installation of your solar system. It’s a convenient and often a quicker way to start reaping the benefits of solar energy.
You can avail solar loans in several different ways – obtain an in-house solar loan, get an unsecured personal loan, refinance your home equity, and so on.
Today, we will discuss the benefits offered by in-house solar loans and how you can compare them when you are talking to multiple solar installers.
What is an In-house Solar Loan?
An in-house solar loan is offered by your solar installer in partnership with a third-party financing agency. Almost all solar installers work with their hand picked solar financer. Their collaboration favors customers, as they get speedy financing, responsive support, and a streamlined experience.
So, when you get solar quotes from multiple solar installers, you can also request details on financing options available from them. Once you get the specifics, it’s time to compare them.
Annual Percentage Rate
Consumers are savvy enough to quickly compare interest rates on their solar loans. However, they often miss the various other costs attached to the loan. Annual Percentage Rate (APR) consolidates all those costs into a simple flat yearly percentage. It includes interest as well as relevant fees.
It can vary anywhere between .99 to 8.99% depending on your credit score. The higher is your credit score, the lower your APR will be.
Some solar loans come with a repayment schedule of 20+ years; some keep it short at 5 years or so. There’s no one perfect choice. What matters here is your needs. If you want to repay the loan and start saving fast, then a shorter repayment schedule would be an excellent choice for you. However, bear in mind that this means that you’ll be paying higher monthly payments.
On the other hand, if you want to make smaller monthly payments, then an extended repayment schedule works best in your favor.
Find out if there is a prepayment penalty. You don’t want to be penalized for repaying your loan faster than your original schedule. So, try to avoid prepayment penalties whenever possible.
Prequalification involves a soft credit check (doesn’t affect your credit score) to pre-qualify you for a loan even before purchasing a solar system. Check with your solar installer whether they offer pre-qualification so that you can get a clear idea of the interest rate you’d be paying beforehand.