11 Feb How do I choose the right solar financing option?
Many Maine families need to use financing to purchase a solar system. The good news is that with financing, many systems are cash-flow positive from day one.
This happens when the savings from the solar panel system are greater than the loan payments. This is an ideal situation because it means Sundog Solar clients are saving money right away while increasing their property value and using clean energy. It’s a win-win for the pocketbook, the environment, and the local economy.
Whether a system is cash-flow positive right away depends on several factors. If the term of a solar loan is short, the monthly loan payments might be higher than the utility bill savings. Keep in mind that manufacturers design solar energy systems to last 30 years. Solar system owners will continue to save money for many years after they’ve paid off the loan.
When looking for solar energy financing, the same general rules apply as with other type of loan.
- A low-interest rate means less interest is paid over the life of the solar loan.
- A shorter loan term means that monthly payments are higher. But typically, a short-term loan term means a lower cost over the life of the loan.
- Loans are either secured or unsecured. Secured loans use an asset as collateral, such as the home itself.
Home Equity Loans
A home equity loan allows homeowners to use the equity in the home as collateral for the loan. It often has a fixed interest rate for a set term, and the lender can receive the money in a lump sum. These loans function similarly to having another mortgage on the house, but may require a home appraisal. Because the home is used as collateral for the loan, it is essential to able to make the payments.
The interest rate on home equity loans is often quite competitive. The payments are also fixed, making it easy to budget. Also, according to the IRS, the interest on a home equity loan is tax deductible if used “to buy, build, or substantially improve the taxpayer’s home that secures the loan.” We recommend asking a tax expert for more information.
Solar Loans Through Sundog Solar
We offer solar loans through a financing partner. These loans require no money down, have fixed rates, and a 12-year term. Many Sundog Solar customers have lower loan payments than their electric bill savings for instant cash savings.
Want to learn more about solar energy financing? Contact Sundog Solar today at 207.548.1100.