Financing the panels is an excellent way to lower your eco footprint while reducing how much money you need to come out of pocket with. Let’s take a close look at the options available when financing solar panels.
What Is a Solar Panel Loan?
Solar financing loans exist to help you spread the cost to install solar power over a number of years. According to SolarReviews.com, the average family saves almost $1,500 per year in electricity costs.
However, it typically costs a lot of money upfront to install the system. Consider that it’s estimated to cost between $16,200 to $21,400 to install a complete solar panel system for the average American home and you can see how a solar loan comes in handy.
Personal loans are the first option to look at. These come in all types and you should find some of the lowest interest rates if you have a relatively high credit score.
A personal loan is unsecured, which means you don’t have to put up anything as collateral. It’s possible that you could get a lower interest rate with a home equity loan. Of course, the difference is that you’re risking your property when going that route.
What Credit Score Will You Need For a Solar Panel Loan?
All lenders vary when it comes to credit score expectations. However, you can generally expect to need a 550 score or above to get an approval. You’ll find that you’ll get the best repayment terms and rates the higher your score.
If you have bad credit and don’t want to wait to try improving your score a little bit, then you should start the process by applying for personal loans set up specifically for people with low credit scores. This lessens the chances of getting denied, which hurts your score overall.
You should find that you find favorable personal loans with excellent interest rates if your credit is outstanding.
Other Types of Solar Panel Loans
A government loan exists called PowerSaver, which is an FHA (Federal Housing Administration) program designed to help for all types of energy-saving technology. Solar panels are covered by the program.
They give you two options:
- PowerSaver Energy Rehab, a 203(k) loan
- PowerSaver Second Mortgage
You’ll need a 660 credit score or higher and a 45% debt-to-income ratio to quality for this loan.
You might also consider a home equity loan when you want to install solar panels. This lets you borrow against any equity that’s built up in your home and apply it to the cost of your solar panels.