Solar Panel Financing
Are you looking to install solar panels in your home?
Installing solar panels in your home offers many environmental and financial benefits. A solar panel can save energy and lower your electricity bill.
We’re not going to lie – the initial costs of getting solar panels can seem out of reach for some households. The average installation cost ranges from $15,000 to $25,000. But that’s where solar financing comes in.
Do you want to know the options you have for solar financing? Read on to find out how to finance a solar panel and its benefits.
Table of Contents
Benefits of Buying a Solar Panel
If you want to boost your savings, the best solar financing option for you is to buy. With cash payment, you can avoid paying fees and interest. In addition, you don’t need to maintain a good credit score to qualify for a loan.
Outright buying a solar panel is an advance payment for years of using electricity in your house. Going solar locks your energy rates for decades and protects you from rising costs. You can continue reading to discover the benefits of buying a solar panel.
Whether you opt to buy, lease, or get a loan, you reduce your utility costs for installing a solar panel. However, the difference in buying is your payment ends when you get the solar panel. There’s no need for monthly payments to pay for years.
Solar panels allow you to enjoy the money you save from reduced utility costs. Buying with cash gives the highest return on investment. When you buy, you own the equipment and all the power it produces.
If you plan to keep solar panels for years, buying them is the best option.
Eligible for Incentives
Did you know that you can qualify for incentives when you go solar? Although the price of solar panels has declined, there’s no denying that they remain expensive for some people. With this, government and private entities offer incentives, making it more affordable.
As the sole owner of the solar panels, you’re eligible for private and government cash incentives. When you qualify, you can reduce the cost of solar panels while getting full ownership. With this, you can produce solar energy in your home by getting a 26% to 50% deduction from the cost.
The incentives often come in the form of tax benefits and solar rebates. To know if you qualify, reach out to your local government and search for private entities offering incentives.
As mentioned, one of the incentives you can get from buying your solar panel is a tax benefit. The U.S. government created an investment tax credit to reduce solar costs. You can deduct 30% of the installation cost from your federal taxes.
You are eligible for the tax credit if you own the solar panels installed in your home. Note that the 30% tax credit is available until 2033. After the year lapses, the tax credit will drop to 26%.
State tax credits depend on your location, as not all states offer this kind of benefit. With this, contact your local state government for more information.
Solar Panel Loans
Not everyone has enough resources for a lump sum payment. If you want to install solar panels in your home yet lack finances, consider getting a loan.
There are lending companies that offer to finance solar panel installation. Their options include home equity loans, in-house financing, and unsecured personal loans. When borrowing money, check the terms, annual rate, and origination fees.
Thus, how is a solar loan beneficial? Read on to find out its benefits.
Like buying a solar panel, you can qualify for a tax credit if you take a loan. Note that you borrow money to get the equipment. Thus, as the owner, you can deduct a percentage of the installation cost from your tax liability.
If you got a solar panel costing $20,000, you could dock off $6,000 from your tax.
One good thing about the ITC is that you can apply it to the upcoming year if you don’t have enough liability. Thus, if your tax liability is $3,000 in the year of installation, you can use the remaining $3,000 the next year.
Energy Cost Saving
When you take a loan, you must pay every month to the lending company. However, this financing option is more cost-efficient than paying high utility bills. With a loan, you know how much you must pay compared to the changing cost of electricity.
If you go solar, you protect your pocket from any electricity rate increase, which can happen at any time.
Leasing Solar Panels
If you find buying or getting a loan to install solar panels out of reach, there is another option you can pursue. As a homeowner, you can opt to lease a solar panel or sign a power purchase agreement with a solar provider. Then, you can either pay for the equipment or the electricity produced.
However, you must note the difference between a solar lease and a solar PPA. With a lease, you pay monthly to use the panels and other equipment. For the PPA, you pay the solar provider for the electricity you use from the solar panels.
Read on to find out the benefits of leasing a solar panel.
No Upfront Cost
When you buy a solar panel, you must produce a high cash upfront. With this, you can overspend your money and savings. To prevent emptying your account, leasing is an ideal option.
If you lease, you don’t need to pay for the installation. Instead, the solar provider pays for all the costs, including the permits, equipment, and labor. With this financing option, you only need to pay for your lease every month once you use the system.
For leasing solar panels, you can opt for Blue Power financing.
Free of Maintenance Fees
Solar panels are low-maintenance. However, it doesn’t mean they don’t need checkups. Unless you opt to lease your solar panels, you must maintain them and pay for the fees.
Apart from the installation cost, you’re free from maintenance efforts and fees in a solar lease. When there’s a problem with the equipment, the solar provider shoulders the reparation and cost. Thus, saving you money for maintaining the panels.
Get Solar Panel Financing Today
The demand for solar panels continues to increase as many people switch to solar energy. Apart from buying, you can consider leasing or getting a loan. Each solar financing option has its benefits.
Want to know more about solar energy? Check out our other blog posts to discover everything you need to know about going solar.