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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.
The new material in action. Xampla

By Hom Dhakal

Plastics are very useful materials. They've contributed significant benefits to modern society. But the unprecedented amount of plastics produced over the past few decades has caused serious environmental pollution.

Packaging alone was responsible for 46% out of 340 million tonnes of plastic waste generated globally in 2018. Although plastic recycling has increased significantly in recent years, most plastics used today are single-use, non-recyclable and non-biodegradable.

Read More Show Less
EcoWatch Daily Newsletter
Juan Camilo Bernal / Moment / Getty Images

To many middle school students, gum is a hot commodity. But, what many people, fully grown or not, fail to consider is, what is gum made of? Although technically not ingested, gum is still edible. Consumers probably know that the sticky, breath-freshening substance is often made with artificial flavors and color. However, not many seem to have asked the question, am I chewing on plastic when I chew my gum?

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.

Accumulated plastics in beach sediments, such as here on the Cocos (Keeling) Islands, can increase daily maximum temperatures by almost 3ºC. Silke Stuckenbrock

Plastic pollution threatens marine life in many ways, from entangling fish and seabirds to wreaking havoc on their digestive tracts when they mistake it for food.

Read More Show Less
Trending
A container ship sank off Sri Lanka's coast Wednesday after a fire burning nearly two weeks. ISHARA S. KODIKARA / AFP via Getty Images

A chemical-laden ship sank off the coast of Sri Lanka Wednesday, after burning for nearly two weeks.

The accident has already led to one of the worst marine disasters in the country's history, as tons of plastic pellets from the burning ship have already contaminated its fishing waters and washed up on its shores, Reuters reported.

Read More Show Less
Plastic debris on sandy waterfront, Jan. 15, 2014. Hillary Daniels / CC BY 2.0

By Sharon Kelly

ExxonMobil is the world's single largest producer of single-use plastics, according to a new report published today by the Australia-based Minderoo Foundation, one of Asia's biggest philanthropies.

Read More Show Less
Maryna Terletska / Moment / Getty Images

Let's state the obvious: Your favorite time of the month isn't when you get your period. The cramps don't help, but buying loads of pricey products isn't a blast, either. But another aggravation arises for those who try to live sustainable lives: the environmental cost.

According to multiple sources, North American women are believed to use — and, subsequently, dispose of — 12 billion single-use menstrual pads and tampons every single year.

Read More Show Less
The Pasig River in the Philippines is the kind of small, urban river that contributes more to ocean plastics than larger rivers, a new study has found. Artur Widak / NurPhoto via Getty Images

Plastic pollution is entering the ocean from more sources than previously thought.

Read More Show Less
Trending
A container ship leaving port in California. Daniel Ramirez / CC BY 2.0

By Tim Lydon

You're right if you think you've been hearing a lot about container ships lately. One off the coast of Sri Lanka that was carrying 25 tons of nitric acid and other cargo suffered an explosion after containers caught fire on May 20 and burned for more than a week, littering the beaches with plastic pollution. And in March all eyes were on the Suez Canal, where a 1,300-foot-long container ship turned sideways and gummed up international trade with a six-day-long traffic jam. Maybe you've also had your shoes, bike or other online purchases delayed because of backed-up ports near Los Angeles.

Read More Show Less
Two men drink bottled water on a beach in Barcelona, Spain. Cavan Images / Getty Images

Is it better for your health and the environment to drink water from a plastic bottle or from a tap?

Read More Show Less
Trending
Anglers on Lake Ontario. Ian Muttoo / Flickr

By Andrew Blok

A record-setting fish was pulled from Hamilton Harbor at the western tip of Lake Ontario in 2015 and the world is learning about it just now.

The fish, a brown bullhead, contained 915 particles—a mix of microplastics, synthetic materials containing flame retardants or plasticizers, dyed cellulose fibers, and more—in its body. It was the most particles ever recorded in a fish.

Read More Show Less
A research team has found a way to make biodegradable plastics actually disappear, unlike ones that only claim to break down. Agricultural Research Service / Wikimedia Commons / CC0

A research team at the U.S. Department of Energy's Lawrence Berkeley National Laboratory (Berkeley Lab) and the University of California (UC), Berkeley has found a way to make biodegradable plastics actually disappear.

Read More Show Less
A newly-hatched green sea turtle heading out to the ocean. Manoj Shah

The 8.7 million species that inhabit this Earth did not evolve in a world dominated by human activity, and this can cause problems when climate change or pollution transforms a previously advantageous environment into a perilous one.

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.
The new material in action. Xampla

By Hom Dhakal

Plastics are very useful materials. They've contributed significant benefits to modern society. But the unprecedented amount of plastics produced over the past few decades has caused serious environmental pollution.

Packaging alone was responsible for 46% out of 340 million tonnes of plastic waste generated globally in 2018. Although plastic recycling has increased significantly in recent years, most plastics used today are single-use, non-recyclable and non-biodegradable.

Read More Show Less
EcoWatch Daily Newsletter
Juan Camilo Bernal / Moment / Getty Images

To many middle school students, gum is a hot commodity. But, what many people, fully grown or not, fail to consider is, what is gum made of? Although technically not ingested, gum is still edible. Consumers probably know that the sticky, breath-freshening substance is often made with artificial flavors and color. However, not many seem to have asked the question, am I chewing on plastic when I chew my gum?

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.

Accumulated plastics in beach sediments, such as here on the Cocos (Keeling) Islands, can increase daily maximum temperatures by almost 3ºC. Silke Stuckenbrock

Plastic pollution threatens marine life in many ways, from entangling fish and seabirds to wreaking havoc on their digestive tracts when they mistake it for food.

Read More Show Less
Trending
A container ship sank off Sri Lanka's coast Wednesday after a fire burning nearly two weeks. ISHARA S. KODIKARA / AFP via Getty Images

A chemical-laden ship sank off the coast of Sri Lanka Wednesday, after burning for nearly two weeks.

The accident has already led to one of the worst marine disasters in the country's history, as tons of plastic pellets from the burning ship have already contaminated its fishing waters and washed up on its shores, Reuters reported.

Read More Show Less
Plastic debris on sandy waterfront, Jan. 15, 2014. Hillary Daniels / CC BY 2.0

By Sharon Kelly

ExxonMobil is the world's single largest producer of single-use plastics, according to a new report published today by the Australia-based Minderoo Foundation, one of Asia's biggest philanthropies.

Read More Show Less
Maryna Terletska / Moment / Getty Images

Let's state the obvious: Your favorite time of the month isn't when you get your period. The cramps don't help, but buying loads of pricey products isn't a blast, either. But another aggravation arises for those who try to live sustainable lives: the environmental cost.

According to multiple sources, North American women are believed to use — and, subsequently, dispose of — 12 billion single-use menstrual pads and tampons every single year.

Read More Show Less
The Pasig River in the Philippines is the kind of small, urban river that contributes more to ocean plastics than larger rivers, a new study has found. Artur Widak / NurPhoto via Getty Images

Plastic pollution is entering the ocean from more sources than previously thought.

Read More Show Less
Trending
A container ship leaving port in California. Daniel Ramirez / CC BY 2.0

By Tim Lydon

You're right if you think you've been hearing a lot about container ships lately. One off the coast of Sri Lanka that was carrying 25 tons of nitric acid and other cargo suffered an explosion after containers caught fire on May 20 and burned for more than a week, littering the beaches with plastic pollution. And in March all eyes were on the Suez Canal, where a 1,300-foot-long container ship turned sideways and gummed up international trade with a six-day-long traffic jam. Maybe you've also had your shoes, bike or other online purchases delayed because of backed-up ports near Los Angeles.