Solar panels are one of the fastest ways to save money. Solar panels will cut or eliminate your electricity bills. Financing a solar panel system is a significant investment. It will further increase your property value.
Solar photovoltaic systems are also good for the environment. Solar panels will decrease fossil fuel consumption, thus dramatically reducing greenhouse gas emissions and making the planet cleaner.
Going solar is not always cheap, depending on the type of solar system and the place you live. Many can’t afford the expenses of solar panel equipment plus installation. Solar panel financing will help you get the funding you need for installing a solar system. In case you decide not to purchase a solar system in cash, you can obtain it by a solar loan or solar lease.
Solar Financing Options
Solar loans are almost perfect for financing your solar system purchase. You can even finance the entire cost of the system. How to understand if solar financing is right for you? If your monthly savings on electricity bills are more than the loan’s payment, do not hesitate to get a loan. Moreover, owning the solar asset, you can soon benefit from financial tax credits, incentives, and other rebate programs, making financial value. Plus, the electricity prices are going up, so your savings will grow over time.
Solar loans can be secured and unsecured. There are different solar financing options available.
A home equity loan is a secured solar loan. With home equity financing, the bank will lend you up to 85% of the equity in your house to finance your solar panels. You will have a reasonable interest rate, but you can lose your property if you miss the payments.
A home equity line is a credit line allowing you to borrow money like a credit card. Though, in this case, the interest rate is variable, and your payment can go up or down.
Personal loans are unsecured solar financing options. There are various personal loans. While the interest rates are higher than for home equity loans, you will not lose your home if you fail your payments.
There are also energy efficiency mortgage loans that will finance your home purchase and solar panel installation at the same time.
To apply for a solar panel loan, you need to fill out an application. With higher credit scores, you will receive better repayment terms and interest rates. So, before applying for a loan, improve your credit score.
Solar leasing allows you to lease solar panels. It is similar to renting a solar system. You receive the financial benefits of having a PV system without buying it. In many cases, there is even no need for down payments. You will have immediate return savings on your utility bills up to 30% monthly. The disadvantage of solar panel leasing is that you do not receive tax incentives as you do not own the solar panels. The person owning the solar panel kit will benefit from all the tax credits and other incentives.
Is It Better To Finance Or Lease Solar Panels?
Whatever you choose, both a solar loan and s solar lease offer benefits for homeowners. Yet, you will benefit from the federal solar panel tax credit, state incentives, and utility company rebates by buying a solar system. For example, with Federal Investment Tax Credit, you will deduct 26% of your solar panel cost. To qualify for this credit, you should install it in a residential property you own and use it for living. Rental properties do not go under this tax credit.
Plus, monthly savings from a solar loan are higher than the savings from a solar lease as loans are paid down in between 5 to 20 years, while a solar lease needs systematic payments and offers about a 20-year term.
Leasing solar panels, you will get maintenance coverage from the owner. While buying a solar panel system, you are going to be responsible for the main costs. However, solar panels require little to no maintenance. Solar panel companies usually offer a 25-year warranty.
Financial Benefits Of Solar Energy Systems
Solar energy is renewable, clean, and free. So, more and more people switch to solar. Going solar, you experience three main financial benefits:
- Bill savings
- Increased home value
- Solar tax incentives.
Lower utility bills are the most popular reason for solar. You can not only become grid-independent but will also earn an opportunity to send the energy excess back into the grid in exchange for the energy credit.
Buying a solar power system will increase your home value. You can sell a home with a solar photovoltaic system for more than a home without a solar system.
If you think about switching to solar, it is high time. In 2021, the Federal Solar Tax Credit will (ITC) step down to 22% and expire in 2022. So, act now to get your most vital return on investment.
A sustainable future is another priceless benefit of using solar energy. Solar usage reduces global warming, harmful emissions, and water consumption.
The Benefits Of Solar Financing
While solar energy and equipment are dropping in price, installing a solar system is still not cheap. Solar financing will help you resolve this problem. So, you do not need to have enough cash to get started. With solar loans, you can save money and take advantage of tax benefits at the same time. Moreover, you can choose your favorable system with high solar panel efficiency.
Author of a publication: Irene Abgaryan