Understanding Your Solar Loan Financing Options
Aug. 17, 2020
It's quick and easy to answer questions about the benefits for solar energy, but the real question most homeowners and business owners want answers to is, “How can I afford solar?”
Not every homeowner’s financial situation allows for the upfront cash required to own solar PV (photovoltaic) panels outright by the time the system is installed and switched on. However, solar financing offers energy-conscious Bay Staters the option to reap all the benefits (and savings) of ownership while spreading the cost out over time. Here are the solar financing options you can utilize in conjunction with a custom designed solar PV system from Boston Solar.
Home Equity Loans
One option many homeowners consider when looking to purchase solar, is taking out a secured loan in the form of a home equity loan to pay the upfront installation costs as cash. While home equity loans are specific to solar, it could be a good financing option for some homeowners. Depending on your lender, if you have good credit and have built up equity in your home, you could secure a home equity loan with low rates using your home as an asset.
However, if home equity loans aren’t right for you, there are some solar loan programs that we work with and recommend that can offer fixed, low interest rates with $0 down with long term repayment options that are packaged just for your solar project in mind.
Solar Loan Programs
Mass Solar Loan
The Massachusetts Department of Energy Resources and the Massachusetts Clean Energy Center (MassCEC) have partnered with participating banks and credit unions to offer a fixed, low-interest residential solar financing option for qualified homeowners. Boston Solar works directly with Mass Save to get the best rates or homeowners can work directly with a participating lender.
However, the Mass Solar Loan program will be sunsetting at the end of 2020 so if you’re looking to take advantage of a Mass Solar Loan for your solar installation, don’t wait to speak to a solar expert at Boston Solar to get your project started.
With the Mass Solar Loan, you get:
$0 down payment
Low, fixed interest rates
Lenders may offer interest-only periods of up to 12 months
Project oversight protections by MassCEC
10 year term length
Avg loans between $3,000 - $35,000
Payment terms: 35% at finance approval / 65% at system start up
UMassFive College Federal Credit Union Solar Financing
Even if you aren’t currently a member of UMassFive College Credit Union, you can take advantage of the Mass Solar Loan through the credit union or their MySolar loan for homeowners, both offering unique benefits and flexibility.
The MySolar loan was created for those that may not qualify for the Mass Solar Loan, but still want to benefit from solar installation. It offers higher loans and longer term lengths but also allows for supplemental projects to be included in the solar installation loan terms.
With the MySolar loan, you get:
$0 down payment
Fixed interest rates from 4.49% - 5.99% depending on term length
12 months interest-free period
Term length options of 60, 120 or 180 months
Up to 15% of loan to cover tree removal and roof repair with a solar installation
Payment terms: 35% at contract signing / 30% at permits issued / 40% at system start up
Sungage Solar Loan Financing
For customers who want to work directly with Digital Federal Credit Union (DCU), Boston Solar works with Sungage Financial for a direct lender loan option. Often a Sungage Solar loan will be processed faster than a Mass Solar Loan and customers still save with a low interest rate.
With a Sungage Solar Loan, you get:
$0 down payment
Fixed 5.49% interest rate
Additional options to finance roof replacements and battery storage
Payment terms: 80% at installation / 20% at system start up
Choosing the Right Solar Financing Option
One of the benefits of partnering with Boston Solar for your solar design and installation is that we will present all your options and help you choose the right solar loan option for you and your new renewable energy system. Not only that, we also help you maximize on the savings (and income) from rebates, tax incentives, and other solar incentives available to Massachusetts residents and business owners. We can even discuss how you can own your own solar with $0 down and still be cash positive!
Pairing Solar Ownership with Solar Incentives
One of the reasons Massachusetts has become one of the top states for solar installation is the many solar incentives that can reduce your installation costs, reduce your taxes, and provide extra income for years to come. Incentives include:
Solar Tax Incentives
There are tax incentives at both the state and federal level which will reduce your amount of tax liability for the year you install solar. Massachusetts offers a tax credit up to $1,000 and in 2020, the federal tax credit is worth 26% but it declines in 2021 to 22% and ends in 2022.
Net metering is the process of accounting for the excess energy your solar panels might produce during peak sunlight hours, and providing your electricity meter a “credit” for any grid-supplied energy used overnight or during times of low solar production. Net metering helps to offsets most, if not all non-solar energy usage, which makes the next incentive even more appealing….
SMART Incentive Income
The Solar Massachusetts Renewable Target (SMART) offers actual income to homeowners that install solar on their home or business. Depending on the incentive block you sign up for, you can receive monthly payments over ten years for your solar production, decreasing the payback period for your solar installation. When you consider that net metering can often offset all energy costs, this is money straight into your pocket or can be used towards your monthly loan payments!
Owning your solar panels through solar financing (as opposed to solar leasing) gives you access to additional savings like the solar tax credits that you would otherwise miss out on. If you are ready to see what solar might look like for you and your wallet, schedule a free solar quote and learn about solar loan interest rates and which solar financing option will be best for you and your home.
Ready to take the next step in owning your own solar energy system? Schedule a free solar quote with the number one Massachusetts-based solar installer. Call 617-858-1645 or get in touch here.