How Much Do Solar Panels Cost and What Are Your Financing Options?

There are many benefits to installing high-efficiency solar panels.

Apart from the obvious good done for the environment, homeowners can take advantage of reduced utility bills and multiple credits and incentives. Furthermore, they can reduce their reliance on irregular and expensive local electric grids.

In the long run, solar panel installation also increases a home’s value.

However, these benefits come at a hefty price. Installing a new system could cost thousands of dollars, depending on the type of panel, the size and numbers needed, and how much power it is expected to generate. But thanks to the many solar financing options on offer, residential solar panel installation has become more affordable in the last few years.

Let’s take a closer look at some of the most popular financing options for solar panels. But first:

How Much Do Solar Panels Cost?

To arrive at an exact figure, a solar panel company will require specific information about your specific energy needs, the size of your home, and its location.

Based on these factors, they will recommend the type of solar panel you need and calculate all the costs you will have to bear.

For an idea of what to expect, we recommend checking out a solar panel costs calculator.

According to Forbes estimates, the average cost of a solar system could be anywhere between $4,500 and $36,000, for an average of around $16,000, after taking into account incentives and rebates.

Considering the many factors that go into these estimates, it makes sense that financing for solar systems is often a complicated process.

How Does Solar Financing Work?

Cash is the most straightforward of solar financing options. There are several benefits to making an upfront purchase.

If you intend on staying in your current home for the foreseeable future, owning your solar panels outright ensures that the lower utility bills won’t be offset by monthly installments. This is a big deal, considering the PGE rate increase of 2023 has ensured that electricity from the grid will cost a lot more in states like California.

At the same time, cash payment allows you to get the most out of government rebates and tax incentives. In fact, the only time this kind of financing isn’t recommended is if you’re planning to move out of your home sometime soon.

However, paying in full is not a viable option for many. In which case, financing options include:

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Solar Loans

Loans are another popular solar panel financing option. With a loan, you can own the entire system with little to no down payment and interest rates that could, at times, be lower than local electricity rates.

Another benefit of this type of financing for solar projects is that the interest rate is fixed, unlike other variable loan payment options. You also still qualify for many rebates and incentives. And there is no collateral needed.

With this solar financing option, ownership of the panels is transferred to you immediately. This means you must bear the costs of all required maintenance or upkeep long before you’ve fully paid for the system.

Home Equity Loans and HELOCs

If you’re not against taking a loan out against your house, a home equity loan is another option for solar panels financing. Much like personal loans, a home equity loan has a fixed interest rate, set repayment timelines, and consistent monthly payments.

A HELOC—home equity line of credit—works similarly, allowing you to use your home’s equity like a low-interest credit card.

Through these two solar financing options, you will benefit from lower interest rates and get access to cash. However, the application process may be more lengthy.

Solar Leases and Power Purchase Agreements

You can lease a solar system from a third-party owner who will be responsible for installing the panels at your property. In return, you will pay a predetermined rate for the energy you consume every month.

Since this solar financing option doesn’t involve actually purchasing the panels, you don’t have to worry about the maintenance and monitoring of the system. At the same time, you can still save on monthly energy costs.

However, there are some drawbacks associated with this kind of solar system financing. For one, you will not be eligible for any rebates or financial incentives that come with buying panels outright. And you won’t benefit from the increase in the value of your home.

Additionally, most leases come with exceptionally long terms. So if you’re planning to move out of your home in the next few years, the burden of transferring the lease will fall on your shoulders, failing which, you must bear the costs of having the panels removed.

FHA and Fannie Mae Loans

If you’re looking to buy a new house and reap the benefits of solar power at home, these two mortgage loans can come in handy.

They are a popular solar financing option for those with bad credit or not eligible for personal loans. However, you should be prepared to bear higher interest rates, fees, and closing costs.

Conclusion: Make Solar Financing Easy with AMECO

Accessing financing for solar panels isn’t the most straightforward process. The number of options at your disposal requires you to make several tough decisions based on your spending power and how much you wish to save.

In fact, the lack of clarity surrounding the process is one of the biggest barriers to homeowners looking to make the switch to solar.

With the assistance of AMECO Solar and Roofing, solar panels financing does not have to be so complicated. With close to 50 years of experience helping customers with the intricacies of how solar panels work and offering insight into the best time to install solar panels, you can trust us to help you with all your solar financing needs.