Solar Financing

Solar Financing

How Does it Work?

A homeowner has the option to finance a PV system to be installed on their roof. As long as they have a qualifying credit report, the homeowner can get the system installed for no upfront cost and own their power. In most cases, the new solar bill totally replaces

The utility company's power bill is still less. The financing is structured in a way where the homeowner has a certain number of months to claim the tax credit (30%) and use it to invest directly towards the system to keep their solar bill as low as possible, or keep it for themselves. If the homeowner keeps the tax credit for themselves instead of putting it towards their system, the loan will be adjusted to a higher monthly payment. Once the term is up, the homeowner fully owns their PV system and has no other financial obligations to pay on it. The homeowner can usually pre-pay at any time with no penalty. If any payment made is in excess of the minimum monthly payment it will shorten the length of the loan, not the monthly payment amount.

Let’s say their monthly payment is $120 from months 1-16. Should the Homeowner not apply their tax credit amount towards the PV System, their monthly payments after 16 months would be $176. If they did apply their tax credit, it would remain at $120.

Who Owns the System?

The homeowner will have ownership of the system from day 1.

What Does it Take to Qualify?

Different loans from different providers all have their own underwriting requirements. Typically a homeowner will need a credit score around 650-660 or a good track record of paying their mortgage on time to qualify for most tier one loan products which have the lowest interest rates and competitive dealer fees. Some providers will offer a tier two product to homeowners who do not qualify for tier one. Tier two comes with high interest rates and high dealer fees which are worth it to receive all of the benefits of going solar.

How to Determine the Savings?

Their payment to rent the power from their utility provider minus their payment to the Finance Company to own their solar.

What if the Customer Moves?

If a customer moves who signed up for a Solar Loan they will have two options. The most popular option is they can choose to add the value of the PV system into the selling price of the home and upon selling can pay off the remainder of the loan balance like they would with a mortgage that still has a balance. Second, the homeowner may sometimes have the option to transfer the remaining balance on the loan to the new home buyer as long as the new buyer agrees to this option and meets the credit requirements to do so. The incoming homeowner gets to avoid the high increasing electric bill and be protected at the fixed lower loan payments. Not all Finance Companies allow for the transfer of the loan.

What are the Positives?

- They have now redirected an increasing cash flow expense towards a fixed asset.

- They can claim the tax credit.

- They can prepay without penalty.

- They have a predictable, controlled, and usually lower bill each

month instead of the ever-increasing and always fluctuating

electric bill.

- Once owned, they will own their entire power source and may

never pay another electric bill.

- They can sell their house faster and for more money.

- The system is still maintained and monitored by the installer and

The production is insured by a cashback production guarantee. (Sunnova only)

What are the Negatives?

- Shows as a debt on your credit report. (Except for Sunnova)

          What Kind of Customer Should Choose This Product?

Anyone who qualifies and can qualify for the tax credit should choose this option since we maintain and monitor the system for the customer and back their production with a money back guarantee which is the same end result as the service is for a lease/PPA, but with them getting to own the asset. The customer has already realized the value in owning a home instead of renting and should see that same value in owning their power source.