Solar Financing: Loans, Dealer Fees and How to Compare Offers

The Consumer Financial Protection Bureau studied solar lending and found that lenders charge installers a fee to offer low rates, and installers pass it on in the price. Hidden fees typically range from 10 to 30 percent of the cash price, and can exceed 50 percent^[1]. Berkeley Lab's price data point the same way: the national median price for loan-financed systems was $4.50 per watt est.^[2], against $3.00 per watt est.^[2] for cash purchases.

1. Get the cash price for each quote, even if you plan to finance.
2. Compare the total you will pay: monthly payment times the number of payments, plus any down payment. That number, not the APR or the monthly payment, is the true cost.
3. Check for a balloon or re-amortization. Many solar loans assume you will pay down a lump sum after a set number of months. That made sense when buyers expected a federal tax refund; for systems installed after 2025 there is no Federal Residential Clean Energy Credit (25D)^[3] to make that payment with.
4. Ask about prepayment. Make sure you can pay the loan off early without a penalty.
5. Compare a home equity loan or credit-union loan for the cash price. It is often cheaper than installer financing.

• "The tax credit pays down your loan." For systems installed after 2025, a homeowner who buys gets no federal credit at all.
• "You will never have an electric bill again." Most utilities keep a fixed monthly charge, and several states credit exports below retail.
• "Your payment will be less than your current bill." Only if the savings estimate is right. Test it with your own bill in our calculator, which shows the loan payment against year-one savings.

A lease or PPA is financing in another form: a company owns the system and you pay for its use. See lease vs. buy for how to compare them with a purchase.