Getting Solar Loans

Solar loans are needed to bridge the gap between the financial means the homeowner has and the relatively high cost on most solar power systems. Applying for solar energy loans and getting a solar power loan is one way to finance the upfront capital investment in solar thermal (solar water heating and solar air heating) and in residential solar electrical power generating systems.

Why a Solar Energy Loan is Needed?

For many homeowners the continuous rising home energy bills, the lower price tag for residential solar power systems, and a growing environmental awareness are the triggers to consider home solar. To make the switch to solar even more attractive there are Federal, States and local energy tax credits and other incentives available to the homeowner. Due to the relatively high cost of solar system, the homeowner usually needs to finance the solar system by taking a long term loan. Next paragraph breaks down into three categories the cost associated with the cost of solar energy systems.

Typical Cost of Solar Systems

Capital investment in solar systems can be divided into 3 categories.

Investment smaller than $5,000: Most solar hot water heaters and solar pool heaters price tag is under $5,000
Investment between $5,000 to $10,000: Smaller than 1,000 Watts residential solar power systems can be obtained for under $10,000
Investment greater than $10,000: Typical home solar power systems, with production capacity greater than 2,000 Watts, will cost more than $10,000. Many homeowners go on 3,000 Watts systems that carry a tag price exceeding $20,000

Solar Loans

The smaller than $10,000 investment can usually be financed from available savings, by short term loans or by using the credit card credit line. For the greater than $10,000 capital investment, longer term financing arrangement are usually needed to bridge the gap. Here is a list of available longer term loans

Home equity Loan: Under present interest rates, these loans are attractive and they are also eligible to receive tax incentives on the interest paid (like most other mortgage plans)
Vendor loans: Similar to what car makers are doing, solar equipment manufacturers resellers and contractors offer long term funding. They offer the funding by their own financial branches or through associated banks.
Energy Efficiency Loans: Conditional on home appreciation and project approval, RESNET (Residential Service Energy Network) associated companies and banks will approve energy improvement loans and solar loans. Click to view the RESNET mortgage page. The page provides links to additional information about solar energy loans
Energy Efficient Mortgage: These are Federal Housing Association (FHA) loans given by banks and guaranteed by the federal government. The FHA guarantees that a lender will not have to write off a loan if the borrower fails to pay.
Another interesting avenue is to lease the solar power system. Click here to read more on solar leasing plans