November 28, 2023

Should You Apply for A Loan to Purchase Solar Panels?

Not all could afford to shell out money for solar panels. Fortunately, there is a loan for that. A solar loan is a loan that is taken out to buy and install solar panels. They provide an opportunity for homeowners to avail and invest in this renewable source of energy without having to spend a large amount of money up front. 

There are numerous solar loan companies providing no-money-down loans and the chance to pay off a loan early without penalty. If you are thinking about getting solar panels by applying for a loan, read the below article first if this should be your decision. 

Solar tax credits

Even if you have availed of a solar loan, you are still eligible for a solar tax credit. This solar tax credit allows you to deduct a certain percentage from your taxes. Be it for residential or commercial purposes, homeowners and business owners who have installed solar panels in their homes or business establishments could avail of solar tax credits, it does not matter how they paid for it. 

Numerous solar loans are designed to take advantage of the solar tax credit. Some would even allow you to pay down your loan as soon as you receive the tax credit, greatly minimizing your monthly loan payments. Don’t forget to inquire whether the Victorian government solar loans you have availed entitled you to solar tax credits.

Solar loan down payments

When you apply for a solar loan, you should know that there is no need for any down payment. If you are asked to pay for any upfront cash, make sure that the down payment does not exceed the $3,000 since most solar loans are zero down. 

Solar loan term payments

The usual term payments for solar loan ranges from ten to twenty-year loans, although there are those that ranges from three to thirty years. If you feel the years are too long, you could pay with a higher interest rate since the loan term and the interest rate are inversely proportional. If you could not pay with a higher interest rate, just pay the loan for a longer period of time.

Solar loan types

There are various solar loan types that you must be aware of to make sure you are availing the most suitable one. The most common solar loan types are unsecured personal loans, home equity loans or lines of credit, and in-house financing through your solar installation firm. An unsecured loan is one that does not require any form of security such as collateral. 

Home equity loans on the other hand allow homeowners to borrow money against their home’s value. In-house financing through solar installation firm usually works directly with solar installers, making it easier for you to find the right financing company.

It is understandable that solar loans appeal to homeowners since the installation of solar panels leads in immediate savings. Just make sure thought that the money you saved on bills should be allotted to the monthly loan payment for you to finish paying off the loan as early as possible without affecting your other expenses. 

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