Going solar on your home is the best way to protect yourself from rising electricity rates. You could even lower your monthly bill immediately. After all energy companies have raised rates between 6% and 24% per year in nearly every state in the country so far this decade. And many electricity providers have already announced rate increases for 2025. Financing solar can be done in a few different ways and it's best to understand them all.
Options for Financing Solar
Some people pay cash for their solar systems to eliminate finance fees and gain the most savings. But if you can’t or do not want to do that you have a few different options. The most traditional way to obtain financing for solar if you don’t pay cash is through a loan from a finance company that specializes in solar financing. Companies like GoodLeap and Mosaic finance purchases of solar systems.
However, much of the savings you look forward to, could end up being absorbed by the higher finance rates currently available. These companies will lower the interest rate down to as low as 3.99% when dealer fees are added to the equation. Dealer fees will ‘buy down’ the interest rate and lower the initial monthly payments. The dealer fees are then added to the purchase price of the solar system. It is much like paying down the interest rate on a home mortgage. If the monthly payment is still less than what a homeowner is currently paying for electricity, or close, then financing a purchase is still better than paying the utility company.
Leases and PPA’s
Since interest rates have risen in the last couple of years, many homeowners have chosen a different option. A solar lease or Power Purchase Agreement (PPA) usually provides a lower monthly payment and more short-term savings than a loan. Companies like Sunrun and Everbright provide these types of financing options. With a lease or PPA homeowners won’t own their solar system. But they also don’t need to worry about filing for the federal tax credit and other issues like maintenance. The tax credit is taken by the lease or PPA company which helps lower the payment.
Financing for Solar – What is the Minimum Credit Score?
With any of the above financing options, the minimum credit score is typically 650. To find out if you qualify, we can help you in less than 5 minutes. It does not require a hard pull of your credit report or show up as an inquiry. These companies do a ‘soft pull’ and specifically look at your credit score. If you have above a 650 credit score you should qualify.
What If You Don’t Have a 650 Credit Score?
If you already know that you don’t have a high enough credit score, or you let us design a system for your home and we run a soft pull through one of our finances partners and you don’t qualify, there is help available. ERA Credit Services, a trusted 12-year-old credit repair and credit building company, has multiple ways to assist you. Learn more about ERA Credit Services.
Learn About the Best Financing Option for You
We're here to help. If you want to get an indepth understanding of solar financing, and would like to receive the lowest price for residential solar, give us a call at 619-252-9670. We work with the top residential installers in the U.S. and can help homeowners in 35+ states and Puerto Rico.
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