Solar Power Installation: FAQ about Financing
It is exciting to finally make the decision to install solar panels on your home! Some homeowners are worried about installing a solar electric system because they don’t think that they can afford the costs. If you are ready to make this investment and you don’t have the money to pay cash up front, then the next step is to consider financing options for your installation. These options make it a possibility for anyone interested in using clean energy in their home.
Payment Options for Solar Power Systems
As the homeowner, you have the option to choose the best financing solution that will work for your family. There are several options available including these:
- Upfront Payment: If you have the cash available, then you might pay for the system upfront. Skip the financing and simplify the process by using your cash on hand to cover the costs. When you pay cash for your solar, the system usually pays for itself within 4 to 6 years on average, depending on the amount of electricity you use each month. The solar modules and inverters come with a 25 year manufacturer warranty. You can also take advantage of the 30% Federal Tax Credit on the price you paid for the solar, based on your personal income tax situation.
- Solar Loan: The third option to consider is a loan to finance the cost of the installation. If you want the long-term benefits of owning the solar power equipment, then it is best to pay cash or secure financing. A 0 Down solar loan allows you to buy the solar system; then pay a monthly payment until the loan is paid off. Most loans are for 12 years and have no pre-payment penalty. The loan company that we use, allows you to put the tax credit down on the loan when you receive it and lower the monthly payments for the life of the loan. Again, the solar modules and inverters are warranted by the manufacturer for 25 years, so once the loan is paid for, you will enjoy free electricity.
- Solar Lease: Another option is to lease a solar electric system. In a lease situation, you do not own the equipment. With a majority of the solar leases, a contract will be signed that allows you to use solar panels owned by a solar company for a monthly payment. Most solar leases are 0 Down and are for a 20 year commitment. Sometimes leases have a 2.9% adder each year, so your monthly payment could increase 2.9% each year. Once the lease commitment is over, you will need to renew the contract, or the equipment will be returned to the solar company. When you lease a solar system, the solar company takes the 30% Federal Tax Credit on the system, since you do not own it.
Picking the right solar financing solution for your situation is important. If you look at the numbers, you will see that a lease requires ongoing payments without anything to show once the lease period is over, plus you are not able to take advantage of the tax credit when you lease. You might consider the benefits of getting a loan to be sure that you own the equipment after the payments are finished. Plus when you own the solar system on your roof, you don’t have to find a buyer to take over your lease payments if you decide to sell your home.
Do you have questions about financing a solar power system? Talk to our experienced team at New Day Solar to learn more: (855) 444-6329 or visit our website at: www.newdaysolar.com. Our prices are on our website.