How to Pay For Your Solar Installation
Are you interested in powering your home or business with renewable energy, but afraid of the upfront cost? Thankfully, financing your solar system isn’t as scary as you might think. There are several avenues to take and you’re sure to find one that’s best suited to you.
Paying off your solar panels operates differently to most debts. Although you’ll be making repayments, you’ll also start saving money on your power bill as soon as your system is installed. It’s important to take advantage of this by firstly finding a good financing option, and secondly ensuring that you adapt your power usage habits to suit life powered by solar.
Let’s explore the different ways you can pay for your solar.
Ok, so it’s not technically a financing option, but it’s a great investment if you’ve got the cash. Solar systems generate a tax-free return, plus you’ll never pay a hefty power bill again and you’ll see a return on your investment in just 3-5 years! In a lot of cases, solar systems can actually generate excess power (i.e. more power than you use), in which case, you’ll actually get paid (usually in credit) for your contributions to the power grid.
While it might initially seem like a large investment to pay for straight up in cash, it might surprise you to find how little a system actually costs in comparison to its benefits. If we could tell you now how much a system would be right here right now, we would, but there are too many variables. We encourage you to give our team a call for a free, no obligation quote on a tailored solar system.
Adding to a Home Loan
A popular way to finance solar systems is by adding the cost to your mortgage. This often allows you to access a substantially lower interest rate and you’ll also avoid paying the upfront fees that occur when taking out a new loan. If you’re dedicated and consistent with your mortgage repayments, this is a good option. However, if you’re only making the minimum repayments, the cost of your solar panels could double by the time you’ve finished paying your home loan.
Many financial institutions now offer green loans to customers. These personal loans specifically fund the purchase of energy saving products, such as solar panels. They generally incur lower interest rates, minimal upfront fees and no early repayment fees.
Borrowing limits are more flexible and loan terms range from six months to seven years.
Do your research and you could land a great deal on a green loan.
If you’d prefer not to pay cash and your credit rating is high, it’s one of the best options for financing your solar system.
A solar lease agreement is an option that gives the leasing company complete ownership of your solar panels until you’ve paid them off. This option allows you to make fixed monthly repayments on the system, however you will also have to pay interest. This is generally a better option for large solar systems on commercial or industrial size buildings. In any case, be sure to compare the upfront cost of your system against the total cost of the lease repayments to conclude whether it’s cost-effective. Another point to note is that you will be required to pay the balance of the loan if you decide to move houses, as it cannot be transferred to the new homeowner.
Interest Free Loans
While we’ve listed it as an option, it’s probably not the best one. Interest free loans are often too good to be true and it’s no different when it comes to solar. The terms are usually longer than green loans, making the monthly repayments higher. Despite technically paying no interest and owning your panels from the get-go, this will likely end up being one of the most expensive financing options.
Personal loans are a safe and reasonable way to finance your solar panels. Personal loans are easy to apply for, pre-approved and if your credit rating has suffered slightly over the years, they’re easier to attain than a green loan. You’ll also be granted the flexibility to source the best solar system with the cash you’ve received from the loan. While interest rates can be a little higher and you’ll need to shop around to find the best loan, it can still work out to be cheaper if you’re committed to paying it off quickly.
Start doing your research to find an option that works best with your financial situation. Your choice should reflect the size of your system, your credit rating and your level of willingness to make repayments. Make smart choices from the start when switching to solar and your investment will pay off.
If you’re interested in learning more about solar or getting a quote, get in touch with us today.