New concerns are emerging around long-term home solar financing

Solar financing for homes has come under fire with the loss of federal tax credits and higher interest rates. Homeowners are also impacted by hidden dealer fees on installer-provided loans. Getting new solar loans has also become increasingly difficult due to tighter lending standards.

According to the Consumer Financial Protection Bureau, loans accounted for 58% and third-party ownership 23% of residential solar financing. Solar panels have many benefits, and homeowners can pay for them wisely with fixed leasing options, a home equity line of credit, and verified local lenders.

What Are Solar Investment Challenges for Homeowners?

A main source of renewable energy financing came to an end when homeowners lost the federal tax credit, which covered 30% of the initial installation cost. The loss of this credit also increases the payback periods. 

Depending on your area, you may receive less compensation for excess energy sent back to the grid thanks to net metering changes.

With tighter lending restrictions, more homeowners no longer qualify for the favorable solar loans they would have previously. The interest rates on solar loans have also increased as high as 16%, according to Solar Tech Online. Lower-interest loans have often come with hidden dealer fees ranging from 15% to 25%.

With these rebates and potential loan losses, more homeowners have turned to leasing for solar financing. However, that creates a loophole as the customer doesn’t own the equipment, which can complicate refinancing or selling the home. You’re locked into a contract and don’t get additional long-term savings beyond your lower energy bills.

If you’re having issues regarding a solar financing contract, you can get solar cancellation help with SCRC and its partnership with Consumer Advocacy Law Group.

What Are Other Solar Financing Options to Consider?

Instead of the installer-offered financing with dealer fees, check out your local bank or credit union for home improvement loans. If you have enough equity, consider a home equity line of credit (HELOC).

Some may benefit from the Property Assessed Clean Energy (PACE), which adds the solar cost to property taxes instead of counting it as debt. It’s available in 36 states (and D.C), such as:

• California
• Oregon
• North Carolina
• Virgina 
• Florida
• New York
• Texas

Is Getting Solar Energy Still Worth It?

A home powered by solar energy helps you maintain a sustainable and energy-independent lifestyle with a reduced carbon footprint. In some cases, home value can increase. Plus, a well-installed system requires little maintenance over its lifespan.

However, you should consider how long you plan to live in your home before installing panels to ensure it’s worth the ROI.

Areas with higher utility usage, high energy bill rates, and good sun exposure are usually the best places for solar power.

Understand Your Financial Rights Concerning Home Solar

Don’t get thrown off by issues with solar financing. Many homeowners have also had problems with unscrupulous lending fees and leases that are difficult to get out of. Luckily, a legal professional can review your case.

If you don’t qualify for traditional solar loans, check your home equity line and local lenders like credit unions.

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