According to the SEIA, the US solar capacity has tripled over the last six years, and this trend is expected to continue. Market experts predict that by 2030, more than 1 in 7 US homeowners will have solar panels on their roofs, and more than half of surveyed Americans claim they would install solar panels if they could break even on their investment within five years.
Fortunately, homeowners have several options at their disposal when it comes to paying for a solar installation, from solar leasing and purchase power agreements to tax incentive rebates, cash, and loans. As a solar installer, knowing about the various solar financing options can help you educate customers regarding the best choice for the size and scope of their project, their energy needs, and their current financial situation.
While solar leasing and solar loans each make renewable power more accessible, they have distinct differences that homeowners should understand before making a decision. Keep reading to learn more about the differences between solar loans and solar leasing.
Solar Loans
A solar loan is a financing option that allows homeowners to purchase solar panels and pay for them over time. The key aspects of solar loans are:
- Ownership: When you take out a solar loan, you own the solar panels. This means you are responsible for maintenance and repairs, but it also means you qualify for any available solar incentives, rebates, or tax credits.
- Monthly Payments: You will make monthly payments on the loan until it is paid off. The loan term can range from 5 to 20 years, and interest rates vary based on creditworthiness and the lender.
- Increased Home Value: Owning solar panels can increase the value of your home. In fact, on average, installing solar panels increases the value of a house by an average of 4.1%.
- Savings: Once the solar panels are paid off, you can enjoy free electricity for the remainder of the system’s lifespan, typically 25 to 30 years.
Solar Leasing
Solar leasing is a contractual agreement where a third party owns the solar panels installed on your property, and you pay a monthly fee to lease them. Here are the main aspects of solar leasing:
- No Ownership: With solar leasing, you do not own the solar panels. The leasing company is responsible for maintenance and repairs, but they also receive any available incentives, rebates, or tax credits.
- Monthly Payments: You will pay a fixed monthly fee to lease the solar panels. This fee is generally lower than what you would pay for electricity from the grid, leading to immediate savings.
- No Increase in Home Value: Since you do not own the solar panels, they do not contribute to an increase in your home’s value. Some potential homebuyers might see the lease as a liability, which could complicate the selling process.
- End of Lease Options: At the end of the lease term, which is typically 20 to 25 years, you may have the option to purchase the solar panels, renew the lease, or have the panels removed.
Although solar loans and solar leasing offer a path to renewable energy adoption without the high upfront costs, a solar loan is often more desirable. This is particularly true for homeowners who want to benefit from the long-term solar investment and are willing to take on maintenance responsibility.
Are you ready to grow your solar business by providing customers with affordable financing solutions?
Partner Forward with Salal Dealer Direct
We team up with contractors nationwide to provide their customers with affordable financing for various solar and home improvement projects.
We can offer some of the most competitive rates and dealer fees because we’re part of a member-owned credit union. That means our profits return to our members—and business partners—through lower rates and fewer fees.
Our Dealer Direct Financing programs feature:
- An online loan application with fast credit decisions and a high approval rate.
- Terms and loan amounts are available to fit various budgets and project sizes.
- Partners pay ZERO dealer fees on our standard program.
How to Start Offering Salal Dealer Financing to Customers
We’re serious about helping your business grow with fast funding times and personalized support from a dedicated and experienced team of lending specialists. To get started, our dealer application process requires these documents:
- Completed dealer questionnaire
- Current income statement and balance sheet
- Copy of business license and/or contractor’s license
