Best Solar Panel Loans

Finance the purchase, delivery, and installation of solar panels

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According to the U.S. Department of Energy, the amount of sunlight that strikes the Earth's surface in an hour and a half is enough to handle the entire world's energy consumption for a full year. Solar panels installed on your roof can convert sunlight into electricity that can power your home in a cleaner and less expensive way than coal, electricity’s traditional source of energy.

While solar panel technology costs are gradually declining, and governments continue to offer tax credits and other financial incentives, a typical rooftop installation can still cost between $15,000 and $30,000. Using solar panel loans and other types of installment loans, you may qualify to finance your project for little to no money out of pocket, and shift what you used to pay your utility company to your new monthly loan payment. After your loan is paid off, you will come out ahead.

In short, while solar panels may cost tens of thousands of dollars, with a solar panel loan, you don’t have to wait years to save up for this expense. You may be able to get started within a week. To help you move quickly, we compiled a list of the six best solar panel loans we could find within the field of 12 that we investigated. Read on to see which lender has the loan amount, rates, and term length that are right for you.

Best Solar Panel Loans in 2021

Best Overall : Dividend


Dividend

 Dividend

With fixed annual percentage rates (APR) as low as 3.99%, a 10-minute paperless online application, a workmanship warranty, no prepayment penalties, and the option to put zero down, Dividend has so many customer-focused benefits with its solar financing that we had to name it best overall.

Pros
  • Flat-rate fixed payments

  • Zero down payment

  • Flexible financing terms

  • Workmanship warranty

  • No prepayment penalties

Cons
  • Not available in every state

  • Autopay is the only payment option

  • To make extra principal payments, you must upload your bank account information each time

Dividend’s easy application process and best-in-class financing terms earn it our vote for best overall solar financing.

Founded in 2013 in San Francisco, Dividend is now a leader in the financing market for clean energy that offers two primary products, the Empower Loan and PACE (Property Assessed Clean Energy). Empower loans reach residential customers, while PACE is a public-private financing option for commercial enterprises. 

Dividend provides loans throughout most of the United States with the exception of Maine, Vermont, Wyoming, Montana, North and South Dakota, Nebraska, and Iowa.

Empower Loans offers fixed automatic payments with APRs starting at 3.99%. Customers describe Dividend’s online application process as simple, taking no more than 10 minutes. There’s no down payment required at the beginning of the loan, and there’s no prepayment penalty if you decide to pay in full early. Loan terms range from 10 to 25 years. 

Dividend does not state an income or credit score minimum to qualify, but rather will use your score and ability to repay the loan to dictate your APR. Most Dividend customers take out loans between $20,000 and $50,000, with monthly automatic re-payment plans.

Best for Large Loans : SoFi


SoFi

 SoFi

If you have a lot of roof space and plan to cover it with solar panels, you’ll feel good knowing SoFi can cover your large solar loan with up to $100,000. Add in a 0.25% rate discount if you choose autopay, plus the company’s commitment to no borrower fees, and you’ll understand why we chose SoFi as our best option for large solar loans.

Pros
  • Loans up to $100,000

  • No origination fees

  • No prepayment fees

  • 0.25% discount for choosing autopay

Cons
  • $45,000 annual income required

  • 680 credit score minimum

With a loan maximum as high as $100,000, no fees, and an autopay rate discount, SoFi ranks as best for large solar loans.

SoFi was founded by Stanford business school students in 2011 by using the alumni network to connect recent grads with alumni for funding. By 2014, the company was launching mortgages, and a student loan refinancing product in 2017. Now, SoFi has one million members, has given $50 billion in loans, and has paid off more than $22 billion in member debt.

Loans range from 24 to 84 months, repaid monthly with an autopay option. Fixed or variable APRs range from 5.99% to 19.63%. To qualify, you must have an annual income of at least $45,000 and a credit score of 680 or above.

Most can be pre-qualified for loans in two minutes with an online application, and funded in seven days. SoFi does not have a specific solar loan, but you can finance your system through their home improvement loan product.

Read the full SoFi Personal Loans Review.

Best for Fixed Rates : New American Funding


New American Funding

New American Funding

By connecting its borrowers to the Fannie Mae (FNMA) HomeStyle Energy Efficient Mortgage (EEM) program, New American Funding offers the best fixed-rate financing through low rates and a government-backed guaranty.

Pros
  • Fannie Mae fixed-rate loan options

  • Fixed 15- and 30-year mortgage

  • May qualify for a mortgage loan for up to 115% of the future appraised value of your home

Cons
  • This is a mortgage program, not a separate home improvement or personal loan

  • Solar and other property improvements must be completed within 180 days of the date of the mortgage note

  • 45 to 60 days to close

New American Funding has the best fixed rates available thanks to its use of the FNMA-backed loan, where APRs can be as low as 2.81% when spread over 30 years. 

New American Funding funds customers for solar panels and other energy efficiency projects through the Fannie Mae HomeStyle Energy Efficient Mortgage program. The company is family-owned with thousands of employees. It is a Fannie Mae, Freddie Mac, and Ginnie Mae direct lender, seller, and servicer.

Energy-efficient loans offer more than solar panels. They could also include water efficiency devices, wind power and geothermal systems, and many more projects. New American Funding offers the HomeStyle Energy Efficient Mortgage to either upgrade your home using a refinance or to finance your new home with energy improvements already built into the cost. 

Properties eligible for New American Funding loans include a one-to-four-unit principal residence, a second home, a one-unit investment property, manufactured homes, condos, co-ops, and planned unit developments.

New American offers fixed rates for 15- or 30-year mortgages. 

  • 30-Year Fixed: 2.63% mortgage rate, 2.81% APR
  • 15-Year Fixed: 2.00% mortgage rate, 2.35% APR
  • FHA 30-Year Fixed: 2.25%, 3.10% APR
  • VA 30-Year Fixed: 2.25%, 2.71% APR

The minimum credit score required is 620, but there is no stated income requirement. Both your income and your debt-to-income ratio will be considered in your loan approval. There are no prepayment penalties.

Best for Long Repayment Terms : Community 1st Credit Union


Community 1st Credit Union

 Community 1st Credit Union

Community 1st Credit Union has the best rate and term length for a solar loan that isn’t wrapped into a mortgage. Its Solar Jackpot Loan can last for 21 years with an APR starting point of 4.74% with built-in rate increase protection every seven years.

Pros
  • Application process is easy and completed online

  • The credit union pays the installer

  • Instant approval

  • No out-of-pocket costs

Cons
  • Borrower picks the installer

  • Credit Union doesn’t insure the workmanship

  • Borrower responsible for getting the certificate of completion to the credit union

Community 1st Credit Union has an ezSolar Loan program that provides a long-term, 21-year solar loan outside of your mortgage note, making it our preferred choice for a long-term repayment plan. 

Interest on energy improvement loans from this credit union can be as low as 3.99% for five, seven, and 10 years. For well-qualified applicants, it can offer instant approvals up to $50,000. Its longest-term program, called the Jackpot Solar Loan, cobbles together three seven-year loans back to back. 

The APR for the Jackpot Solar Loan starts at 4.74% for the initial seven years. It then will reset to the new seven-year U.S. Constant Maturity Treasury (CMT) rate, plus 3.25%. It resets again for the final seven-year term. There is rate protection for these reset periods. Each adjustment can increase by no more than 2.5% over the previous CMT rate in effect. In other words, your APR will not increase by more than 2.5% maximum if the CMT climbs substantially, and the credit union adjusts the 3.25% add-on downward as needed. 

The credit union does not have stated income or credit score minimums but does consider both of these aspects of your package, along with your debt-to-income ratio.

The online application takes less than 10 minutes to complete. Having already chosen your solar panel installer, you’ll type into the application the contractor’s Solar Company Identifier (SCI) code. You will upload your documents for income verification and identification and answer some questions about your property. 

Once your loan is approved, you’ll sign the documents online. Your installation will begin with the credit union paying your installer according to contract terms. 

The Jackpot Solar Loan gives you the lowest monthly payment available from Community 1st Credit Union. The online application instantly approves loans up to $50,000, but loan amounts up to $100,000 are also available. There are no prepayment penalties for any of the credit union's energy improvement or solar loans.

Best for Quick Funding : LightStream


LightStream

 LightStream

LightStream’s same-day funding potential alone puts it in a small class of solar lenders, but when you add in the fact that it can loan up to $100,000 with a 12-year term with rates as low as 5.99%, you can see why it’s our best for quick funding.

Pros
  • Fixed rate, simple interest

  • Same-day financing possible

  • Unsecured loan

  • No fees or prepayment penalties

Cons
  • Must have good credit, expect 680 or above

  • Autopayment discount is only offered prior to funding

LightStream can deposit up to $100,000 in your bank account as soon as the same day that you complete all of your application and document submissions, making it the clear winner of our quick funding category.

LightStream, a division of Truist Bank, is an online consumer lender with the support of a major FDIC-insured bank.

Those seeking to finance their solar installation will find LightStream has low rates for those with good credit. It offers low-interest, fixed-rate loans that are backed with a Rate Beat Program, in which LightStream will offer a rate 0.10 percentage points lower than a rate offered to you by a competitor.

Sample Rates:

  • $5,000-$9,999 loan, 24 to 36 months, 7.49% to 15.49%
  • $10,000-$24,999 loan, 24 to 36 months, 3.99% to 14.49%
  • $10,000-$24,999 loan, 73 to 84 months, 6.99% to 16.29%
  • $25,000-$49,999 loan, 85 to 144 months, 6.89% to 16.49%
  • $50,000-$100,000 loan, 85 to 144 months, 5.99% to 16.49%

LightStream offers whole project funding with no fees, no home equity requirement, and no prepayment penalties. It also doesn't require an appraisal. 

The LightStream loan allows customers to control the terms of their home improvement loan. Customers can repay the loan in as little as two years or take up to 12 years, depending on the amount financed. The terms are related to good credit, so you must have a solid credit history to apply. There is no stated income minimum, but the company will look at your income and DTI to determine your repayment qualifications. 

You apply online using electronic signatures and, if you are approved, you’ll be asked to present a valid Visa or MasterCard credit card for verification purposes. No charges will be applied.

Read the full LightStream Personal Loans Review.

Best for Poor Credit : Upgrade


Upgrade

 Upgrade

Upgrade, the winner of our best for poor credit category, looks at a borrower’s full financial picture, including income, credit history, debt usage, and score, making it easier for borrowers with lower scores to qualify.

Pros
  • Change your monthly payment date for your convenience

  • No early prepayment penalty

  • No minimum credit score

  • Unsecured loan

Cons
  • 2.9% to 8% origination fee

  • 36- or 60-month terms only

Those who have less-than-perfect credit should try the best for poor credit option, Upgrade. While Upgrade doesn't offer loans specific to solar energy financing, it does provide personal loans up to $50,000, funds in less than a week, and has a lenient credit score policy. Rates depend on credit score, credit usage history, and the loan term.

Loans can be used for home improvements to remodel or repair a home without refinancing or taking out a home equity loan. This can be used to make energy renewal improvements, including solar panel installation.

Loan term lengths are either 36 or 60 months, with APRs ranging from 5.94% to 35.97%. For a solar panel installation, you would apply for a personal loan, which has a 2.9% to 8% origination fee deducted from the loan proceeds.

Applying with Upgrade is a no-hassle process where customers can apply online in minutes to see their proposed rate without impacting their credit score. The online application enables customers to review several loan options so they can pick the one that fits their needs.

Once customers accept an offer, the money is sent to the bank within a day of clearing necessary verifications. According to Upgrade, most of their loans deposit funds into their borrowers’ accounts within four days, while funds sent directly to creditors may take up to two weeks before the payment clears. Upgrade has no prepayment penalty.

Read the full Upgrade Personal Loans Review.

Bottom Line

You can finance your solar panel purchase and installation with a specifically designed solar panel loan, a personal or home improvement loan, or a mortgage. The size of the loan you need, your capacity to make large payments, and your credit profile and income will determine whether you want to apply for a loan that can be paid off in three, five, or seven years or one that extends out 20 to 30 years.

With a 25-year term option to keep your monthly payments low, loan amounts big enough to cover the majority of home panel installations, APRs as low as 3.99%, a workmanship warranty, no origination or prepayment penalty fees, and a 10-minute application, Dividend Solar Finance stood out as our overall best.

Compare Providers

Company Why We Picked It Max Term/Max Loan Amount
Dividend Best Overall 25 years/$50,000
SoFi Best for Large Loans Seven years/$100,000
New American Funding Best for Fixed Rates 30 years/$510,400 (up to $765,600 in higher-cost areas)
Community 1st Credit Union Best for Long Repayment Terms 21 years/$100,000
LightStream Best for Quick Funding 12 years/$100,000
Upgrade Best for Poor Credit Five years/$50,000

Frequently Asked Questions (FAQs)

Can You Finance Solar Panels?

You can finance the purchase and installation of solar panels with either a specific solar loan, or with a personal or home improvement installment loan. You may even finance your solar project with a home equity loan, line of credit, or a refinanced mortgage. There are pros and cons to each finance method that influence your term length, monthly payment amount, and APR. 

How Much Does Solar Panel Financing Cost?

Many solar panel and installment loan lenders do not charge an origination fee or require a down payment on your project. In these types of cases you can buy your panels and get them installed with no money out of pocket. The monthly payments you eventually agree to will be shaped by your credit profile, DTI, term length, and APR. 

Most solar panel loans range from three to 12 years. There are a few outliers that fund for 20 or 21 years, and if you use the Fannie Mae HomeStyle Energy Efficient Mortgage, you can combine an APR potentially under 3% and a 30-year mortgage that wraps your solar project into its note for one low payment. 

When Are Solar Panel Loans Worth It?

To calculate whether investing in solar panels is worth it, add up the gross cost of the system. This would be the quote you receive from a contractor for the purchase and installation of the panels. Then subtract any rebates or tax credits that are available to you where you live. The difference is your actual cost.

Next, calculate your annual savings in electricity use and remember to add to that number any income you’ll receive from selling your energy back to the utility provider. This sum, which combines your savings with your incentive income, is called your annual benefit.

Finally, divide your actual cost by your annual benefit. The answer is the number of years it will take you to payback your solar loan. If you plan to live in your home for several years after your payback period ends, then a solar panel loan would make sense for you.

Quick example:

  • Cost of panels and installation = $30,000
  • Incentives, tax credits = $10,000
  • Actual cost = $20,000 ($30,000 - $10,000)
  • Annual savings per year = i.e., $100 per month x 12 months = $1,200
  • Potential income = i.e., $110 per month x 12 months = $1,320
  • Annual benefit = $2,520 ($1,200 + $1,320)
  • Payback period = $20,000 / $2,520 = 7.9 years

Do you intend to live in the home for eight years? You basically break even. Do you plan to stay in the home for 20 years? Then the project becomes well worth it. The life of a solar energy system averages 25 to 30 years.

Is It Better to Finance or Lease Solar Panels?

Financing versus leasing your solar panels depends on your financial goals and the incentives that may or may not be available in your area.

Financing may be your best option if you want to take advantage of the financial benefits of installing solar panels rather than the environmental benefits alone. Available federal and state incentive programs can lower your tax burden, reduce your gross cost of the system, and may increase the market value of your home.

You may prefer to lease your panels if you want to avoid the responsibility of maintenance or repairs of your solar panel system, or if you are ineligible for government tax credits. 

How We Chose the Best Solar Panel Loans

We researched 12 lenders before we selected these best six. To find out which company would win each category, we uncovered the strengths and weaknesses of each company’s loan programs, terms, rates, and fees. 

Lenders may have offered wide APR ranges, but in order to make our list, they had to accommodate excellent credit scores with competitive rates, while also adapting to applicants with less-than-stellar credit profiles. In general, most of our winners looked at the whole applicant, rather than just reacting to a credit score as a disqualifier. We favored lenders with longer loan term options, too, so that borrowers had the potential to keep their monthly payments as low as possible. Finally, we looked for an easy application process, whether it be through an online form or an easy-to-find phone number.

Article Sources

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  1. Energy.gov. "How Does Solar Work?" Accessed February 15, 2021.

  2. EnergySage.com. "How Much Does the Average Solar Panel Installation Cost in the U.S.?"
    Accessed February 15, 2021.