Best Solar Loan Rates and Financing Options for 2024
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Last updated 03/14/2024 by
Ben LuthiInstalling solar panels on your roof is a good way to save money on electricity costs and reduce your carbon footprint. However, getting a loan to finance your solar panels can be difficult if you don’t know what you’re looking for. To get the best deal, you should always look for the best solar loan rates.
“Taking out a solar loan may seem daunting,” says Massy Almubidin, owner of IntegrateSun, a Houston-based solar company. “But at the end of the day, you own the solar system and the benefits that come with it. The solar tax credit can reduce the downpayment for the system, and homes with solar often sell faster and for more money.”
To help you find the right financing option, we’ve put together a list of the top five lenders you should consider when applying for a solar loan.
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Four lenders with the best solar loan rates
As you’re shopping around for a solar loan, you have several options from which to choose. Often, the solar company you’re buying from offers financing. In fact, they may offer to foot the bill for a period to incentivize you to sign up.
But at the end of the day, you own the solar system and the benefits that come with it. The solar tax credit can reduce the downpayment for the system, and homes with solar often sell faster and for more money.”
But before you jump on that offer, consider what the interest rate will be after the initial promotion and compare it with these lenders:
1. SoFi
While SoFi has a powerful presence in the student loan space, it also offers low-interest personal loans, which you can use for anything, including solar panel installation. Also, you’ll even get a 0.25% deduction on that rate if you set up autopay.
Here’s what else you need to know:
2. Earnest
Using alternative ways to measure your creditworthiness, Earnest can provide loans to people who might not otherwise qualify with another lender. While it offers low-interest rates, there is no deduction for setting up autopay on a personal loan with the lender.
Here are some terms to know:
3. LendingClub
Of all of the lenders listed here, LendingClub has the lowest minimum credit score requirement, making it possible for people with bad or fair credit to qualify. Similarly, with Earnest, there’s no discount if you elect autopay. However, it’s still wise to do so to make sure you don’t miss any payments.
Here are the details to know:
4. FHA PowerSaver Loan Program
In addition to working with good residential solar financing companies, you can also save on interest by checking out government loans for solar panels.
Technically, it’s not the government that’s lending you the money. Rather, the FHA PowerSaver Loan Program works with different lenders to offer homeowners a way to finance home improvements to boost the home’s energy efficiency. Here are the details:
How to qualify for the best solar loan rates available
While these lenders offer low-interest loans you can use to finance your solar panels, there’s no guarantee that you’ll get the best rates they offer. In some cases, the range of interest rates is wide.
To make sure you get the best interest rates these lenders offer, consider the following tips:
1. Boost your credit score
The best rates are usually reserved for those with excellent credit. If that doesn’t describe your credit score, take steps to improve your credit. For example, consider paying down credit card balances and collection accounts, making payments on time, and checking your credit reports for errors.
2. Lower your debt or boost your income
Your debt-to-income ratio is a big deal when you’re applying for a loan. Additionally, the lender wants to know whether adding more debt will stretch you too thin financially. To lower your debt-to-income ratio, pay down your debt or find ways to boost your income, including working overtime and creating a side hustle.
3. Shop around
Don’t just go to the lender with the best interest rates and assume that you’d get a lower rate no matter what. Each lender has its ways of determining creditworthiness, and it’s important to compare several lenders.
Some lenders even allow you to pre-qualify for a loan, which allows you to get an idea of what interest rate you might get without a hard credit check. Doing this can help you avoid getting multiple inquiries on your credit report for no reason.
4. Ask your bank
“If you are a long-term customer with your bank or credit union, they may be able to offer better terms because of the loyalty factor,” says Almubidin.
Which lender should you choose for the best solar loan rates?
There’s no best lender for everyone because different loans come with different rates, fees, and requirements. Depending on your credit and financial situation, one may be better than the others. As you’re shopping around, check out the interest rates, loan terms, fees, and any other fine print that can impact you as you’re paying back the loan. Check out the best personal loans to ensure that you choose the best option for you.
“Just like any big purchase that requires a loan, you have to detail what you want from the loan terms and then find the options that best suits you,” says Almubidin. “Research is key, and understanding every aspect of the loan should be a consideration.”
If you compare the offers made by the top lenders, you’ll have the peace of mind knowing that you’re getting the best rate for your situation.
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Ben Luthi is a personal finance writer and a credit cards expert who loves helping consumers and business owners make better financial decisions. His work has been featured in Time, MarketWatch, Yahoo! Finance, U.S. News & World Report, CNBC, Success Magazine, USA Today, The Huffington Post and many more.
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