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Adding solar panels to your home can be a good way to conserve energy and save money on electricity. In fact, they could save you an average of $10,000 to $30,000 over the lifetime of your solar panel system, according to EnergySage.
However, while this could help you to greatly reduce your electricity bill, adding solar panels to your home can be expensive.
One way to potentially cover this expense is with a solar loan — a type of personal loan used for adding solar panels or otherwise improving your home’s energy efficiency.
Here’s what you should know about solar loans:
- 15 of the best solar panel loans for 2021
- How to get a personal loan for solar panels
- Is it worth it to get solar panels?
- Solar panel tax benefits
- Other types of solar loans
- Frequently asked questions
15 of the best solar panel loans for 2021
On average, solar panels can cost anywhere from $9,225 up to $28,000, according to Modernize Home Services. Keep in mind that your actual cost can vary depending on:
- Where you live
- The types of panels you choose
- How many panels you purchase
- The company you hire
If you decide to take out a personal loan to pay for solar panels, it’s important to consider as many lenders as possible. This way, you can find the best loan for your needs.
Tip: As you compare your personal loan options, keep in mind that personal loans for solar panels or other upgrades for energy efficiency are generally referred to as home improvement loans.
Here are Credible’s partner lenders that offer personal loans for solar panels:
|Lender||Fixed rates||Min. credit score||Repayment terms (years)||Fees|
|7.99% - 29.99% APR||Not disclosed by lender||2, 3, 4, 5||Origination fee|
|9.95% - 35.99% APR||550||2, 3, 4, 5||Origination fee|
|11.79% - 20.84% APR||730||3, 4, 5, 6||Origination fee, late fee, insufficient funds fee|
|8.99% - 35.99% APR||600||2, 3, 4, 5||Origination fee|
|7.99% - 24.99% APR||660||3, 4, 5, 6, 7||Late fee|
|9.57% - 35.99% APR||660||3, 5||Origination fee|
|7.99% - 35.99% APR||660||2, 3, 4, 5, 6||Origination fee|
|7.49% - 25.49% APR with autopay||700||2, 3, 4, 5, 6, 7 |
(up to 12 years for home improvement loans)
|18.0% - 35.99% APR||None||2, 3, 4, 5||Origination fee|
|8.49% - 17.99% APR||700||1, 2, 3, 4, 5||None|
|6.99% - 35.99% APR||640||2, 3, 4, 5||Origination fee|
|8.99% - 25.81% APR10||Does not disclose||2, 3, 4, 5, 6, 7||None|
|11.69% - 35.99% APR7||560||3, 5, or 7 years 8||Origination fee|
|8.49% - 35.99% APR||600||2, 3, 5, 6||Origination fee|
|6.4% - 35.99% APR4||620||3 or 5 years4||Origination fee|
Achieve could be a good choice if you want to apply with a cosigner or have proof of retirement savings, as either of those might help you qualify for a better interest rate. You can borrow $10,000 to $50,000 with terms from two to five years.
If you have poor or fair credit, Avant could be a good choice for a personal loan. You can borrow $2,000 to $35,000* with repayment terms from two to five years.**
Axos Bank personal loans are available from $10,000 to $50,000 with terms from three to six years. If you’re approved, you could get your funds as soon as the next business day.
In addition to your credit score, Best Egg also looks at more than 1,500 “proprietary credit attributes” from sources that include external data providers and your “digital footprint.” This means you might have an easier time qualifying with Best Egg compared to other traditional lenders.
With Best Egg, you can borrow $2,000 to $50,000 with terms from two to five years.
If you’re looking for a long repayment term, Discover could be a good option — you can borrow $2,500 to $40,000 with three to seven years to repay it. If you’re approved, you could get your funds as soon as the next business day after acceptance.
If you need a cosigner, LendingClub could be a good option — it’s one of the few lenders that allow cosigners on personal loans. With LendingClub, you can borrow $1,000 to $40,000 with a three- or five-year repayment term.
LendingPoint specializes in working with borrowers who have near-prime credit — usually considered to be a credit score in the upper 500s or 600s. With LendingPoint, you can borrow $2,000 to $36,500 with terms from two to six years.
If you need to borrow a large amount, LightStream could be a good option — you can borrow $5,000 to $100,000. Most LightStream loans come with terms from two to seven years, but if you borrow specifically for home improvements like solar panels, you could have up to 12 years to repay your loan.
Unlike many other lenders, OneMain Financial has no minimum credit score requirement — which means you might be able to qualify with below-average credit. OneMain Financial will also consider your financial history, credit history, income, expenses, and loan purpose to determine your creditworthiness.
With OneMain Financial, you can borrow $1,500 to $20,000 with terms from two to five years. Keep in mind that larger loan amounts might require collateral.
If you only need to borrow a smaller amount, PenFed could be a good option — you can borrow as little as $600 up to $50,000 with terms from one to five years.
Keep in mind that while you don’t have to be a PenFed member to apply for a loan, you’ll have to join the credit union if you are approved and want to accept the loan.
Prosper operates a peer-to-peer lending platform that matches borrowers with investors — which means loan funding can sometimes take longer compared to other lenders. However, you can also get your funds as soon as the next business day barring any delays.
With Prosper, you can borrow $2,000 to $50,000 with repayment terms from two to five years.
SoFi is another option for borrowers who need a large loan — you can borrow $5,000 to $100,000 with terms from two to seven years. With SoFi, you’ll also have access to several borrow perks, such as unemployment protection, career coaching, and investing advice.
If you’re looking to build your credit, Universal Credit might be a good option. You can borrow $1,000 to $50,000 and will also have access to free credit score monitoring, educational tools, and personalized recommendations that could help you improve your credit over time.
Upgrade could be a good choice for borrowers who need a loan quickly. You can borrow $1,000 to $50,000 with a three- or five-year term, and you could get your funds within a day of clearing necessary verifications if you’re approved.
In addition to your credit score, Upstart will also consider your education and job history to determine creditworthiness — which means you might be eligible even if you have little to no credit history. You can borrow $1,000 to $50,0005 with Upstart.Learn More: Kitchen Remodel Loans: Compare Financing Options Online
How to get a personal loan for solar panels
If you’re ready to take out a personal loan for solar panels, follow these four steps:
- Check your credit. When you apply for a personal loan, the lender will check your credit to determine your creditworthiness — so it’s a good idea to take a look at your credit beforehand to see where you stand. You can use a site like AnnualCreditReport.com to review your credit reports for free. If you find any errors, dispute them with the appropriate credit bureaus to potentially boost your score.
- Compare lenders and pick a loan option. Be sure to shop around and compare as many personal loan lenders as you can to find the right loan for your needs. Consider not only interest rates but also repayment terms, any fees charged by the lender, and eligibility requirements. After you’ve done your research, choose the loan option that works best for your needs.
- Complete the application. Once you’ve picked a lender, you’ll need to complete a full application and submit any required documentation, such as tax returns or pay stubs.
- Get your funds. If you’re approved, the lender will have you sign for the loan so the funds can be released to you. The time to fund for a personal loan is usually about one week — though some lenders will fund loans as soon as the same or next business day after approval.
Check Out: 17 Installment Loans to Consider
Is it worth it to get solar panels?
Getting solar panels might be worth it in some cases, but it isn’t right for everyone. Here are a few factors to consider while making your decision:
Size of your home
If you have the roof space, you might be able to fit quite a few panels and save even more on future electricity bills. However, this also means paying more up front to install the panels.
If you have a smaller home, you’ll need fewer panels — but you might not save as much on your electricity bill.
Where you live plays a large part in determining whether you should install solar panels as well as how many panels you can get. Additionally, if you’re in an area that has long winters or days with limited sun, you’ll generate much less compared to someone who lives in an area with long sunny days.
The way your home faces also impacts how many panels you can get. For example, if a large part of your roof doesn’t get sun until the later part of the day or if trees and foliage are blocking the panels, it might not be worth installing panels on that side since they won’t be getting maximum sun exposure.
Cost of installation
Depending on where you live and when you get your panels installed, it could take up to a month or more to notice a difference in your electricity bill. And even if there’s a dip in your bill, you’ll still need to manage your monthly payments — whether you bought or leased your panels.
If you take out a solar loan to cover your costs, you might end up either breaking even or saving a bit overall in the first few years until your loan is paid off.
You can estimate how much you’ll pay for a loan using our personal loan calculator below.
Enter your loan information to calculate how much you could pay
With a $ loan, you will pay $ monthly and a total of $ in interest over the life of your loan. You will pay a total of $ over the life of the loan.
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Solar panel tax benefits
Homeowners who install solar panels could be eligible for the federal solar energy tax credit. If you install a solar panel system from 2020 to 2022, you could get a 26% tax credit. This credit is reduced to 22% for systems installed in 2023.
To be eligible for this credit, the system must be installed during the tax year and generate electricity for a U.S.-based home.
Learn More: Where to Get a $20,000 Personal Loan Fast
Other types of solar loans
A personal loan isn’t your only option for financial solar panels. Here are a few other types of solar loans to consider:
Some solar companies provide their own financing options or partner with lenders that offer solar loans. This could be a simple route if you’re already planning to buy panels from the company.
Home equity options
You could also consider tapping into your home’s equity, such as with a home equity loan, home equity line of credit (HELOC), or cash-out refinance. Because these options are secured by your home, they often come with lower interest rates than personal loans.
Just remember that if you can’t keep up with your payments, you risk losing your home.
If buying solar panels outright is too expensive, you could think about leasing them. These leases typically last for 20 or 25 years, after which you’ll return the panels.
However, keep in mind that leasing solar panels could also make it difficult to sell your home in the future if you haven’t finished your lease. In this case, you’ll generally either have to buy out the lease or negotiate for whoever buys your home to assume the lease.
Solar Power Purchase Agreement
You could also look into a Solar Power Purchase Agreement (PPA), where you allow a third party to install a solar panel system. You’ll make payments to this third party for your electricity while they benefit from the tax credits and sale of electricity.
Like leasing, a PPA could be a good choice if you don’t plan on staying in your home long term or don’t want to pay for installing panels yourself.
PACE solar loans
The property assessed clean energy (PACE) model was created to finance energy efficiency and renewable energy on private property — both commercial and residential. PACE programs are designed to help property owners install energy improvements (like solar panels) without having to come up with an upfront payment.
If you decide to work with a PACE program, you’ll repay the improvement costs over 10 to 20 years via property assessments. These assessments are secured by the property and are paid along with your property taxes.
Unfortunately, residential PACE financing programs are only offered in California, Florida, and Missouri. But there are also some cities and utility companies that offer their own solar financing options — be sure to reach out to your city government and utility company to see if any assistance is available to you.
Fannie Mae HomeStyle Energy mortgages
A HomeStyle Energy mortgage can be used to help improve the energy efficiency of your home and can be applied for during an initial home purchase or a refinance. With this option, you can finance energy-related improvements up to 15% of the “as completed” appraised property value of a home.
This type of mortgage could come with lower interest rates and longer repayment terms compared to other alternatives.
Frequently asked questions
Here are the answers to several commonly asked questions regarding solar loans.
Does a solar loan affect credit score?
When you apply for a solar loan, the lender will perform a hard credit check to determine your creditworthiness. This could cause a slight dip in your credit score — however, this effect is usually only temporary, and your score will likely bounce back within a few months.
Additionally, a solar loan might actually help your credit score. For example, if you consistently make on-time payments or can diversify your credit mix by taking out a personal loan for solar panels, you could see an improvement in your score over time.
Ultimately, this positive impact on your credit score could outweigh any initially negative effects.
What credit score is needed for solar panels?
This depends on how you want to finance your solar panels. If you want to use a personal loan to pay for them, you’ll typically need good to excellent credit to qualify — a good credit score is usually considered to be 700 or higher.
There are also several lenders that offer personal loans for bad credit. However, keep in mind that these loans will likely come with higher interest rates compared to good credit loans.
Is it better to lease or buy solar panels?
In general, buying solar panels will likely save you more money in the long run compared to leasing and could also qualify you for tax deductions or other incentives. Additionally, if you plan to sell your home, you could get more money if you also sell the panels.
However, if covering the entire cost of solar panels is too high, then leasing could be a decent option. Just keep in mind that because the leasing company owns the panels, you won’t be eligible for tax deductions — and you might be subject to increasing payments over time that could further reduce your savings.
What happens if I decide to move?
This depends on whether you bought or leased your solar panels.
- If you bought your solar panels, you could opt to take them with you when you move. However, removing and reinstalling solar panels can be expensive — and the process could damage the roof for the next owner of the house. Because of this, selling the panels along with the home could be a more cost-effective choice.
- If you lease your solar panels and want to move before your lease is up, you’ll have to either buy out the lease or negotiate for the next owner of the house to assume the lease. In general, buying out a solar panel lease can be very costly — which is why it’s generally not a good idea to lease if you expect to move in the near future.
Can you refinance solar loans?
Yes, you can. To refinance a personal loan that you used to purchase solar panels, you’ll simply take out a new personal loan to pay off the old one. Depending on your credit, this might get you a lower interest rate, which could save you money on interest and even help you pay off your loan faster.
Or you could opt to extend your repayment term to reduce your monthly payment. Just remember that choosing a longer term means you’ll pay more in interest over time.
How long are solar loans?
Depending on the lender, personal loans for solar panels typically come with repayment terms ranging from one to seven years. There are also some lenders that offer longer terms for home improvement loans — for example, you could have up to 12 years to repay a LightStream home improvment loan.
If you decide to take out a personal loan for solar panels, remember to consider as many lenders as possible to find the right loan for you. Credible makes this easy: You can compare your prequalified rates from multiple lenders in two minutes — without affecting your credit.
About Rates and Terms: Rates for personal loans provided by lenders on the Credible platform range between 5.20%-35.99% APR with terms from 12 to 144 months. Rates presented include lender discounts for enrolling in autopay and loyalty programs, where applicable. Actual rates may be different from the rates advertised and/or shown and will be based on the lender’s eligibility criteria, which include factors such as credit score, loan amount, loan term, credit usage and history, and vary based on loan purpose. The lowest rates available typically require excellent credit, and for some lenders, may be reserved for specific loan purposes and/or shorter loan terms. The origination fee charged by the lenders on our platform ranges from 0% to 12%. Each lender has their own qualification criteria with respect to their autopay and loyalty discounts (e.g., some lenders require the borrower to elect autopay prior to loan funding in order to qualify for the autopay discount). All rates are determined by the lender and must be agreed upon between the borrower and the borrower’s chosen lender. For a loan of $10,000 with a three year repayment period, an interest rate of 7.99%, a $350 origination fee and an APR of 11.51%, the borrower will receive $9,650 at the time of loan funding and will make 36 monthly payments of $313.32. Assuming all on-time payments, and full performance of all terms and conditions of the loan contract and any discount programs enrolled in included in the APR/interest rate throughout the life of the loan, the borrower will pay a total of $11,279.43. As of October 9, 2023, none of the personal loan lenders on our platform require a down payment nor do they charge any prepayment penalties.