Financing your Solar Panel System with Solar Loans:-Solar Loans If you prefer not to spend the upfront money to install your solar panel system, solar loans are a great option for you. They allow you to finance the entire cost of your system.
With a loan, you’ll own your system and you’ll be entitled to all rebates, tax credits and other incentives. These benefits allow you to maximize the return on your investment in solar. There are two types of solar loans, secured and unsecured.
Financing your Solar Panel System with Solar Loans:-
With both types, there are $0 down options so you won’t have to put any money down. Regardless of whether you use a secured or unsecured loan, your monthly loan payments are likely to be less than your current electric bill, so you will start saving money right away without any incurring any upfront costs.
Electricity prices continue :-
And, over time, as electricity prices continue to rise, your savings will continue to grow. the most common form of secured loans are home equity loans or home equity lines of credit, sometimes referred to as a second mortgage. With this type of loan, you borrow against the equity you’ve built in your home. Your home serves as collateral.
These loans have favorable terms and the lowest interest rates. Additionally, the interest on the loan is tax deductible. But, if for some reason you were to default on the loan, the bank has the option to foreclose on your home. A second, very similar type of loan is an FHA Title 1 secured loan. FHA Title 1 loans are guaranteed by the government.
Home as collatera :-
You would still use your home as collateral, These loans have favorable terms and low interest rates. If you default on the loan, the lender will have a lien against your home so that the loan will be paid when or if you sell your house. Your other option is an unsecured loan. These loans do not require any collateral.
This makes them riskier for the lender, and that risk is reflected in the higher interest rate. These loans are similar to other personal loans or credit cards. Interest on these loans is not tax deductible. Also, if you were to default on an unsecured loan, your credit score would be impacted. Applying for a secured loan is a little more involved and takes slightly longer than an unsecured loan.
Your bank may need the extra time :-
Your bank may need the extra time to appraise the value of your home, since it will serve as collateral. Secured loans generally have lower interest rates because they are less risky. Lower interest rates translate to lower monthly payments and, you’ll also be able to deduct the interest from a secured loan from your taxable income.
Interest on unsecured loans is not tax deductible Now that you understand your options, you’ll need to choose the one that’s best for you. The EnergySage Marketplace is an excellent starting point. The Marketplace will help you get quotes from multiple pre-screened solar installers and financial companies.
It will also provide you with apples-to-apples comparisons of the financial benefits associated with purchasing the system and financing it with solar loans, solar leases or PPAs. The Marketplace makes it easy for you to evaluate each option and choose the one that will best meet your needs and financial objectives.
For more information about this and other topics such as the types of available solar loans, leases and PPAs, how to compare them or to start shopping.
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