“Non-lien” personal loans are now structured, in some cases, specifically for homeowners to purchase solar. They vary from typical personal loans in the following ways:
They allow a single owner to finance up to $40,000 for solar.
They allow a married couple to finance up to $80,000 for solar.
They allow you to make a one-time payment to the loan amount and have the loan payments “re-amortized.” This payment must be made in the first 18 months, and these monies are typically generated from the federal tax credit you receive for your solar installation.
They are not a lien loan, so the interest can’t be written off your taxes.
They are typically available in 84- to 180-month time frames and have no prepayment penalty.
Interest rates are typically in the 6.5% range, based on automatic deposit payments.
Payments are typically less than your average electric bills, providing you take the 120-month or longer option.
Investors loaning the money are local investors. People just like you.
Equity Lines of Credit
Most of us are familiar with home loans and equity lines of credit. Because these loans are secured against the property, there must be equity in your home in order to qualify for these programs. Interest rates are typically low and have no prepayment clauses. Payments are typically less than your average electric bill, assuming the financing term is 120 months or longer.
With the new government solar HERO Program, no credit score is required, and you can get started with $0 down. Fresno Homeowners HERO is unique in that it provides financing for approved energy efficient, water efficient, and renewable energy products.
HERO finances 100% of the cost to purchase and install eligible products, including solar.
No Down Payment
20% equity required
No Credit Score needed
Low interest rates
Secured as a lien on your property taxes
New owners can assume the debt
HERO offers low, fixed interest rates and flexible payment terms including 5/10/15/20 years for most products. Repayments are made through your property taxes. Additionally, if the property is sold before the HERO Financing is paid in full, the remaining payments can be passed on to a new property owner.
The downside of the HERO Program is that there are substantial upfront fees the Contractor is obligated to pay for. These fees can add thousands of dollars to the project cost, which can increase the homeowner’s monthly payments when compared to traditional financing.
A Solar Power Purchase Agreement (PPA) is a financial agreement where a developer arranges for the design, permitting, financing and installation of a solar energy system on a customer’s property, typically at little to no cost. The developer sells the power generated to the customer at a rate that is typically lower than the local utility’s retail rate.
As the owner of the solar system, the developer or PPA investors keep all tax benefits available through the federal and state government. PPA’s are typically long-term agreements (20-25 years). and in some cases allow for the customer to buy the system from the developer. If the ownership option is available, it typically occurs at the end of the PPA agreement.
A Solar Lease is another financial agreement where a developer arranges for the design, permitting, financing and installation of a solar energy system on a customer’s property, typically at little to no cost. The end user or “customer” agrees to pay the developer on a monthly basis for the energy created from the solar system.
As the owner of the solar system, the developer or lease investors keep all tax benefits available through the federal and state government. Leases are typically long term (20-25 years), and in some cases the customer is allowed to buy the system from the developer. If ownership is available, it typically occurs at the end of the lease agreement.
To help lower the monthly payments on the front end of the agreement, an escalator rate is used, which increases the monthly payment every year for the duration of the lease. A 3-4% escalator rate is typical.
PPA’s and leases are typically 20-year contracts. They typically have no exact stated buy-out amount, and some do not even allow conversion to ownership. They both require complete prepayment of the entire contract amount. They can be assumed, but no prequalifications of any assumption is stated. This could mean assumption qualifications are so stringent that most new customers would not qualify, and the entire lease or PPA contract would have to be prepaid in full prior to the close of escrow.
PPA’s do not typically offset all of your electric bill. This is primarily due to the fact that the investors do not want to pay for a system that overproduces electricity. Investors can only charge you for the energy you use, not any overproduction. PPA and lease investors take all of any tax credits or rebates.
Financing has made great strides in helping homeowners take control of their electric bills. The following options are now available in most areas of California: