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EcoWatch is a community of experts publishing quality, science-based content on environmental issues, causes, and solutions for a healthier planet and life.
A man carries a bucket of plastic waste at an import plastic waste dump in Mojokerto, Indonesia, on December 4, 2018. Ulet Ifansasti / Getty Images

Editor's note: This article has been updated with correspondence from the Basel Action Network and the Center for International Environmental Law

The majority of the world is working together to reverse the massive plastic pollution problem. But, the world's leading producer of plastic waste, the U.S., isn't on board and isn't following the rules.

Read More Show Less
EcoWatch Daily Newsletter
Waste pickers like this woman in India are disproportionately exposed to the toxins from plastic waste. Caisii Mao / NurPhoto via Getty Images

Plastic pollution isn't just a threat to non-human life like turtles and whales. It's also a major environmental justice problem.

That's the conclusion of a new report released Tuesday from the UN Environment Program and ocean justice non-profit Azul, titled Neglected: Environmental Justice Impacts of Plastic Pollution.

Read More Show Less
AndreyPopov / iStock / Getty Images

Many homeowners can benefit from installing solar panels, harnessing the sun's energy to help reduce or even eliminate their dependence on traditional utilities. Although solar panels can be expensive, solar loans make residential systems more accessible to homeowners.

Indeed, if you live in an area that gets consistent year-round exposure to the sun, solar panels can be an effective way to lower your home's energy costs while minimizing your environmental footprint. The biggest obstacle to solar adoption is the initial cost of solar panels.

All in, solar panel installation costs typically range from $10,000 to $35,000. In this article, we'll explain how solar loans can make that initial investment much easier to handle.

Disclaimer: This article is for informational purposes only. It should not be relied on for and is not intended to provide accounting, legal or tax advice.

Solar Loan Basics

So, how do solar loans work, exactly? Well, they're similar to home improvement loans, or any other type of purchase loan: They enable you to buy a residential solar system and pay it off over time.

There are plenty of solar loan options to choose from. For example, to finance solar panels, you can typically choose from any of the following:

  • An unsecured personal loan
  • A home equity loan or line of credit
  • In-house financing through your solar installation company

For the most part, the terms and conditions of solar loans mimic those of any other standard loan. Specifically:

  • Getting a lower interest rate means having a lower overall cost to borrow.
  • A shorter loan term generally means higher monthly loan payments but a lower overall cost to borrow.
  • Loans are available in a wide array of interest rates, term lengths, loan amounts, credit requirements, etc.

An important thing to note is that homeowners who finance their solar energy systems with a loan are still eligible for the federal solar tax credit. This gives you a credit worth 26% of your total solar installation costs.

How to Choose the Right Solar Loan

As you seek the best solar loan for your situation, there are a number of factors to keep in mind. These include:

  • Monthly payment amount: If you end up choosing a shorter loan term (i.e., a loan that you must pay off in a shorter amount of time), your monthly payments will probably be higher. The overall cost of the loan will be lower, but it's nevertheless important to consider the impact on your household budget.
  • Down payment amount: Depending on the loan you choose, you may or may not be required to put down a payment on the solar panels. Generally, larger down payments will mean lower interest rates and a more affordable loan overall.
  • Fees: Some solar lenders may charge prepayment penalties or monthly fees in addition to your monthly principal and interest payments. Always make sure you get fee information upfront, so as to ensure there are no surprises on your loan statement.

Secured Vs. Unsecured Solar Loans

Another important factor to consider is whether you'll get a secured solar loan or an unsecured solar loan. Here's what homeowners should know about these two options:

  • Secured loans are usually connected to some piece of collateral, such as a piece of equity in your house; this provides the lender with some protection. If you fail to make your payments, the lender can claim their piece of collateral. Because the lender has some insurance, secured loans usually offer lower interest rates and more favorable terms overall.
  • Unsecured loans do not have any collateral or security provisions for the lender. They represent a greater risk on the lender's part, and thus usually come with higher interest rates and less favorable terms.

Ultimately, the decision about which type of loan to seek comes down to this question: Do you have enough equity in your home to take out a secured loan? If so, and if you are willing to use some of that home equity to pay for solar panels, then a secured loan may be the smarter choice overall.

How to Get Low Interest Rates for Solar Loans

In addition to choosing the right type of loan, there are other steps you can take to keep your interest rates manageable when you finance a solar panel system:

  • Shop around: It's usually best not to go with the very first lender you find. Spend some time shopping around and comparing rates. Most lenders will give you a free quote that's good for a number of days while you compare offers from other companies.
  • Have someone co-sign: Having a co-signer on your solar loan — especially one with excellent credit — creates extra assurances for the lender and will usually result in more favorable rates.
  • Improve your credit score: There are several ways to improve your credit score to get a lower interest rate on a solar loan. For example, you can pay down old debts and credit card balances, be on time with monthly bill payments, and ensure you don't open any new credit cards as you apply for your solar loan.

Also be aware that there are things you can do to pay less over time other than getting a lower interest rate. Examples include choosing a shorter repayment period, looking for discounts like paperless or auto-pay discounts, avoiding loans with high fees and, if applicable, making a more substantial down payment.

Local Solar Loan Programs

Homeowners who are interested in going solar should also know about Property Assessed Clean Energy (PACE) loan programs. According to the Department of Energy, PACE programs "allow a property owner to finance the up-front cost of energy or other eligible improvements on a property and then pay the costs back over time through a voluntary assessment." What makes these programs unique is that the assessment is tied to the property itself, not to the individual.

PACE financing legislation exists in some form in 36 states plus Washington D.C. A handful of states have separate loan programs for homeowners interested in solar. Here are some current programs worth knowing about:

State Solar Loan Program Maximum
Loan Amount
Interest Rate Longest
Repayment Term
Connecticut Energy Conservation Loan Program $25,000 0% to 7% 12 years
Louisiana Home Energy Loan Program (HELP) $6,000 2% 5 years
Michigan Michigan Saves Home Energy Financing $50,000 4.44% to 7.90% 15 years
North Carolina State-regulated municipal loan options Varies Up to 8% 20 years
Ohio Energy Conservation for Ohioans
(ECO-Link) Program
$50,000 3% APR reduction
on bank loans
7 years

Additionally, certain municipalities and local utility companies may offer low-interest solar loans. We recommend researching your specific area before turning to banks or credit institutions.

Where to Get a Solar Loan

If your state doesn't have its own solar energy loan program or you're not eligible for enrollment, there are plenty of other places to get solar loans. Some of the best places to check include:

  • Credit unions
  • Lending institutions
  • In-house financing through your solar installer (which will come from a third-party solar lender)

Again, it's crucial to shop around and compare rates before deciding on which solar lender is the best fit for your needs. To get started with a free quote and find solar loan information from a top solar company in your area, you can fill out the form below.

Frequently Asked Questions: Solar Loans

Are solar loans worth it?

There are various factors to consider as you decide whether getting a solar loan is worth it. Solar loans help you increase the value of your property, lower utility bills, minimize your impact on the environment and potentially claim some tax incentives. Then again, financing does decrease your overall savings, and extends the break-even point for your residential solar system.

Do banks do solar loans?

Some banks do offer solar loans, though often with interest rates that exceed what you'd pay elsewhere. It may be worth checking with your local bank, but always remember to shop around and compare.

What is the best way to finance solar?

If you have sufficient home equity, a secured solar loan is often the most cost-effective approach. If you don't have sufficient home equity, an unsecured solar loan can work just fine.

What type of loan is a solar panel loan?

Solar panel loans are generally considered to be a type of personal loan, similar to a home improvement loan.

Can you buy a solar battery with a solar loan?

Most often the answer is yes, but make sure you double-check the terms of your loan.

Nzambi Matee told reporters she was "tired of being on the sidelines," and decided to create a solution of her own for commercial plastic waste. Gjenge Makers Ltd.

Nzambi Matee is an entrepreneur with an incredible goal -- to turn plastic destined for the landfill into sustainable, strong building material. Her company, Gjenge Makers, uses the plastic waste of commercial facilities to create bricks that can withstand twice the weight threshold of concrete.

Read More Show Less
Trending
Xsandra / Getty Images

Looking for ways to cut down on single-use plastic while grocery shopping? You may already have eco-friendly shopping bags, but bringing your own reusable produce bags is another easy swap.

According to the UN Environment Program, up to 5 trillion single-use plastic bags are used globally each year, and because of the material they're made from, most municipal recycling centers don't accept them (more on this below).

The most sustainable option is to skip the bag altogether. You can also make your own reusable produce bags out of old T-shirts. But if you'd rather purchase them new, here are our recommendations for the best reusable produce bags on the market today.

Read More Show Less
person holding green leaf vegetable
Photo by Markus Spiske on Unsplash

Bringing your own reusable grocery bags when you go shopping is one of the easiest ways to cut down on your plastic consumption — according to the UN Environment Program, up to 5 trillion single-use plastic bags are used globally each year.

The most sustainable option is to use a bag you already have, whether it's an old tote or a laundry basket (thank TikTok for that idea). You can also make your own reusable grocery or produce bags out of T-shirts. But if you'd rather purchase designated reusable grocery bags, here are our recommendations.
Read More Show Less
LumiNola / E+ / Getty Images

By Gwen Ranniger

Fertility issues are on the rise, and new literature points to ways that your environment may be part of the problem. We've rounded up some changes you can make in your life to promote a healthy reproductive system.

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A 2019 Basel Convention amendment targeting plastic waste exports went into effect on Jan. 1. Boris Horvat / AFP / Getty Images

This month, a new era began in the fight against plastic pollution.

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Trending
David Mark / Pixabay

By Douglas McCauley

This article is part of The Davos Agenda.

The year 2050 has been predicted by some to be a bleak year for the ocean. Experts say that by 2050 there may be more plastic than fish in the sea, or perhaps only plastic left. Others say 90% of our coral reefs may be dead, waves of mass marine extinction may be unleashed, and our seas may be left overheated, acidified and lacking oxygen.

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New studies show that the world is back on track to repairing the damage to Earth's ozone layer. Annette Riedl / picture alliance via Getty Images

By Martin Kuebler

In recent years, scientists had been alarmed by a sudden unexplained rise in ozone-attacking chemicals in the atmosphere. Higher levels of trichlorofluoromethanes, also known as CFC-11, were showing up in air samples — despite being officially banned worldwide since 2010.

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Trending
A customer carries his reusable bag after shopping at a supermarket in New York City. New York State, which implemented its plastic bag ban on March 1, has decided to hold off enforcement until at least May 15. Eduardo Munoz Alvarez / Getty Images

A number of states and cities that implemented bans on plastic bags are putting them on hold over concerns about the cleanliness of reusable bags amidst the COVID-19 pandemic.

Read More Show Less
assorted-color straws
Meghan Rodgers / Unsplash

Keeping a reusable straw in your purse, pocket, on your key ring, or in the glove compartment of your car makes it easy to skip single-use plastic when you're on the go. In fact, purchasing reusable straws, made from materials like bamboo, glass, silicone, and stainless steel, is one of the simplest ways to reduce your waste.

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A man carries plastic shopping bags in Times Square on May 5, 2018 in New York City. Kena Betancur / VIEWpress / Corbis / Getty Images

Nearly one year after New York became the second state in the nation to pass a ban on grocery store plastic bags — the law is going into effect on Sunday.

Read More Show Less
EcoWatch is a community of experts publishing quality, science-based content on environmental issues, causes, and solutions for a healthier planet and life.
A man carries a bucket of plastic waste at an import plastic waste dump in Mojokerto, Indonesia, on December 4, 2018. Ulet Ifansasti / Getty Images

Editor's note: This article has been updated with correspondence from the Basel Action Network and the Center for International Environmental Law

The majority of the world is working together to reverse the massive plastic pollution problem. But, the world's leading producer of plastic waste, the U.S., isn't on board and isn't following the rules.

Read More Show Less
EcoWatch Daily Newsletter
Waste pickers like this woman in India are disproportionately exposed to the toxins from plastic waste. Caisii Mao / NurPhoto via Getty Images

Plastic pollution isn't just a threat to non-human life like turtles and whales. It's also a major environmental justice problem.

That's the conclusion of a new report released Tuesday from the UN Environment Program and ocean justice non-profit Azul, titled Neglected: Environmental Justice Impacts of Plastic Pollution.

Read More Show Less
AndreyPopov / iStock / Getty Images

Many homeowners can benefit from installing solar panels, harnessing the sun's energy to help reduce or even eliminate their dependence on traditional utilities. Although solar panels can be expensive, solar loans make residential systems more accessible to homeowners.

Indeed, if you live in an area that gets consistent year-round exposure to the sun, solar panels can be an effective way to lower your home's energy costs while minimizing your environmental footprint. The biggest obstacle to solar adoption is the initial cost of solar panels.

All in, solar panel installation costs typically range from $10,000 to $35,000. In this article, we'll explain how solar loans can make that initial investment much easier to handle.

Disclaimer: This article is for informational purposes only. It should not be relied on for and is not intended to provide accounting, legal or tax advice.

Solar Loan Basics

So, how do solar loans work, exactly? Well, they're similar to home improvement loans, or any other type of purchase loan: They enable you to buy a residential solar system and pay it off over time.

There are plenty of solar loan options to choose from. For example, to finance solar panels, you can typically choose from any of the following:

  • An unsecured personal loan
  • A home equity loan or line of credit
  • In-house financing through your solar installation company

For the most part, the terms and conditions of solar loans mimic those of any other standard loan. Specifically:

  • Getting a lower interest rate means having a lower overall cost to borrow.
  • A shorter loan term generally means higher monthly loan payments but a lower overall cost to borrow.
  • Loans are available in a wide array of interest rates, term lengths, loan amounts, credit requirements, etc.

An important thing to note is that homeowners who finance their solar energy systems with a loan are still eligible for the federal solar tax credit. This gives you a credit worth 26% of your total solar installation costs.

How to Choose the Right Solar Loan

As you seek the best solar loan for your situation, there are a number of factors to keep in mind. These include:

  • Monthly payment amount: If you end up choosing a shorter loan term (i.e., a loan that you must pay off in a shorter amount of time), your monthly payments will probably be higher. The overall cost of the loan will be lower, but it's nevertheless important to consider the impact on your household budget.
  • Down payment amount: Depending on the loan you choose, you may or may not be required to put down a payment on the solar panels. Generally, larger down payments will mean lower interest rates and a more affordable loan overall.
  • Fees: Some solar lenders may charge prepayment penalties or monthly fees in addition to your monthly principal and interest payments. Always make sure you get fee information upfront, so as to ensure there are no surprises on your loan statement.

Secured Vs. Unsecured Solar Loans

Another important factor to consider is whether you'll get a secured solar loan or an unsecured solar loan. Here's what homeowners should know about these two options:

  • Secured loans are usually connected to some piece of collateral, such as a piece of equity in your house; this provides the lender with some protection. If you fail to make your payments, the lender can claim their piece of collateral. Because the lender has some insurance, secured loans usually offer lower interest rates and more favorable terms overall.
  • Unsecured loans do not have any collateral or security provisions for the lender. They represent a greater risk on the lender's part, and thus usually come with higher interest rates and less favorable terms.

Ultimately, the decision about which type of loan to seek comes down to this question: Do you have enough equity in your home to take out a secured loan? If so, and if you are willing to use some of that home equity to pay for solar panels, then a secured loan may be the smarter choice overall.

How to Get Low Interest Rates for Solar Loans

In addition to choosing the right type of loan, there are other steps you can take to keep your interest rates manageable when you finance a solar panel system:

  • Shop around: It's usually best not to go with the very first lender you find. Spend some time shopping around and comparing rates. Most lenders will give you a free quote that's good for a number of days while you compare offers from other companies.
  • Have someone co-sign: Having a co-signer on your solar loan — especially one with excellent credit — creates extra assurances for the lender and will usually result in more favorable rates.
  • Improve your credit score: There are several ways to improve your credit score to get a lower interest rate on a solar loan. For example, you can pay down old debts and credit card balances, be on time with monthly bill payments, and ensure you don't open any new credit cards as you apply for your solar loan.

Also be aware that there are things you can do to pay less over time other than getting a lower interest rate. Examples include choosing a shorter repayment period, looking for discounts like paperless or auto-pay discounts, avoiding loans with high fees and, if applicable, making a more substantial down payment.

Local Solar Loan Programs

Homeowners who are interested in going solar should also know about Property Assessed Clean Energy (PACE) loan programs. According to the Department of Energy, PACE programs "allow a property owner to finance the up-front cost of energy or other eligible improvements on a property and then pay the costs back over time through a voluntary assessment." What makes these programs unique is that the assessment is tied to the property itself, not to the individual.

PACE financing legislation exists in some form in 36 states plus Washington D.C. A handful of states have separate loan programs for homeowners interested in solar. Here are some current programs worth knowing about:

State Solar Loan Program Maximum
Loan Amount
Interest Rate Longest
Repayment Term
Connecticut Energy Conservation Loan Program $25,000 0% to 7% 12 years
Louisiana Home Energy Loan Program (HELP) $6,000 2% 5 years
Michigan Michigan Saves Home Energy Financing $50,000 4.44% to 7.90% 15 years
North Carolina State-regulated municipal loan options Varies Up to 8% 20 years
Ohio Energy Conservation for Ohioans
(ECO-Link) Program
$50,000 3% APR reduction
on bank loans
7 years

Additionally, certain municipalities and local utility companies may offer low-interest solar loans. We recommend researching your specific area before turning to banks or credit institutions.

Where to Get a Solar Loan

If your state doesn't have its own solar energy loan program or you're not eligible for enrollment, there are plenty of other places to get solar loans. Some of the best places to check include:

  • Credit unions
  • Lending institutions
  • In-house financing through your solar installer (which will come from a third-party solar lender)

Again, it's crucial to shop around and compare rates before deciding on which solar lender is the best fit for your needs. To get started with a free quote and find solar loan information from a top solar company in your area, you can fill out the form below.

Frequently Asked Questions: Solar Loans

Are solar loans worth it?

There are various factors to consider as you decide whether getting a solar loan is worth it. Solar loans help you increase the value of your property, lower utility bills, minimize your impact on the environment and potentially claim some tax incentives. Then again, financing does decrease your overall savings, and extends the break-even point for your residential solar system.

Do banks do solar loans?

Some banks do offer solar loans, though often with interest rates that exceed what you'd pay elsewhere. It may be worth checking with your local bank, but always remember to shop around and compare.

What is the best way to finance solar?

If you have sufficient home equity, a secured solar loan is often the most cost-effective approach. If you don't have sufficient home equity, an unsecured solar loan can work just fine.

What type of loan is a solar panel loan?

Solar panel loans are generally considered to be a type of personal loan, similar to a home improvement loan.

Can you buy a solar battery with a solar loan?

Most often the answer is yes, but make sure you double-check the terms of your loan.

Nzambi Matee told reporters she was "tired of being on the sidelines," and decided to create a solution of her own for commercial plastic waste. Gjenge Makers Ltd.

Nzambi Matee is an entrepreneur with an incredible goal -- to turn plastic destined for the landfill into sustainable, strong building material. Her company, Gjenge Makers, uses the plastic waste of commercial facilities to create bricks that can withstand twice the weight threshold of concrete.

Read More Show Less
Trending
Xsandra / Getty Images

Looking for ways to cut down on single-use plastic while grocery shopping? You may already have eco-friendly shopping bags, but bringing your own reusable produce bags is another easy swap.

According to the UN Environment Program, up to 5 trillion single-use plastic bags are used globally each year, and because of the material they're made from, most municipal recycling centers don't accept them (more on this below).

The most sustainable option is to skip the bag altogether. You can also make your own reusable produce bags out of old T-shirts. But if you'd rather purchase them new, here are our recommendations for the best reusable produce bags on the market today.

Read More Show Less
person holding green leaf vegetable
Photo by Markus Spiske on Unsplash

Bringing your own reusable grocery bags when you go shopping is one of the easiest ways to cut down on your plastic consumption — according to the UN Environment Program, up to 5 trillion single-use plastic bags are used globally each year.

The most sustainable option is to use a bag you already have, whether it's an old tote or a laundry basket (thank TikTok for that idea). You can also make your own reusable grocery or produce bags out of T-shirts. But if you'd rather purchase designated reusable grocery bags, here are our recommendations.