The Best Solar Panel Loans of 2022

Homeowners who install solar panels on their property can save on electricity while helping the environment. The best solar panel loans make it easier to finance this major home improvement project.

By Jeff Keleher | Published Sep 2, 2022 12:53 PM

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The Best Solar Panel Loans Options

Photo: istockphoto.com

Many homeowners are intrigued by the idea of installing solar panels on their property. Not only can solar panels help lower utility bills by using solar energy in addition to—or instead of—the electrical grid, but homeowners who pivot to solar energy may also be able to shrink their environmental footprint. Although solar panels could save households money in the long run, they require an up-front investment—and that expense can be significant. The average cost of solar panels is $25,633, but prices may be much higher depending on the scale of the project. Homeowners who want to purchase solar panels but are worried about budgeting for installation may find some relief with solar panel loans.

The best solar panel loans can help homeowners finance this environmentally friendly home renovation project, allowing them to repay the loan amount over a comfortable period of time. In many cases, lenders finance solar panel installations through unsecured personal loans, although some may offer secured financing options as well. Unsecured loans do not require any collateral, which means that borrowers don’t need to worry about their lender repossessing their assets if they miss payments and default on the loan. On the other hand, unsecured loans tend to have higher interest rates than secured loans like mortgages or auto loans, so borrowers should take into account how much interest they’ll end up paying on their solar panel loan.

Other financing options include home improvement loans such as home equity loans or home equity lines of credit (HELOCs), which may have lower interest rates but will also likely have longer funding timelines, more thorough application processes, and strict collateral requirements.

As such, when looking for the best solar companies to handle installation, homeowners may also want to think about how they are going to pay for their investment. With so many financing options to consider, it’s important that homeowners carefully research available loan providers to find the best solar panel loans to meet their needs.

  1. BEST OVERALL: LightStream
  2. RUNNER-UP: SoFi
  3. BEST MONTHLY RATES: ezSolarLoan
  4. BEST FOR SECURED FINANCING: Best Egg
  5. BEST FOR LARGE PROJECTS: Dividend
  6. ALSO CONSIDER: Upgrade
The Best Solar Panel Loans Options

Photo: istockphoto.com

What to Consider When Choosing One of the Best Solar Panel Loan Lenders

When searching for the best solar panel loans, homeowners will want to weigh the various factors that impact availability and affordability. However, time is also an important consideration, as some lenders may be able to approve loans and deposit funds more quickly than others. In addition, the best lenders can provide services and support that make the customer experience more enjoyable and stress-free from loan origination through repayment.

Coverage Area

As homeowners begin their search for the best solar panel loans, they may want to start by identifying loan providers that offer this particular type of financing in their area. Some companies provide loans for solar panels across the entire country, so homeowners can apply for a loan no matter where they live. Other loan providers have much more limited service areas, only covering select states. Before digging into loan terms, interest rates, and other factors, homeowners can trim their list of potential candidates and save themselves time by removing from consideration lenders that don’t provide loans to their state or ZIP code.

Maximum Loan Amount

Solar panels can be a major investment for homeowners, costing tens of thousands of dollars in some instances. With that in mind, it’s important to check that lenders are willing to extend enough money to cover the full cost to buy and install this equipment. Because some lenders finance solar panels with personal loans rather than specialized loans, however, their maximum loan amounts may be lower than the total cost of a solar panel installation. If homeowners are unsure of how much money they will need to fund their project, they may want to consider erring on the side of caution and working with a lender who has high loan limits. Alternatively, prospective borrowers can price out their solar panel installation first and then look for a loan provider that can finance the entire project.

Annual Percentage Rate

Annual percentage rate (APR) is a good way to gauge the total cost of a loan because it factors in interest as well as other related expenses, such as lender fees. Because solar panel loans are often unsecured loans, borrowers can often expect their APR to be a bit higher compared with rates on mortgages and other secured loans. Homeowners hoping to find interest-free solar panel loans will likely be disappointed, as these types of loans simply do not exist.

The APR on a solar panel loan can vary quite a bit from lender to lender, so it may be a good idea to check APR ranges during the vetting process. Borrowers may also want to take into account how their own financial status could impact the likelihood of receiving a lower APR. Homeowners who have already taken on significant debt may not qualify for the lowest possible APR offered by a lender, so picking a loan provider based solely on which one has the lowest minimum APR may not be the best choice for those borrowers.

In some cases, lenders may offer discounts that lower a customer’s APR by a certain percentage point. For instance, a 0.25 point discount would reduce a 7.99 percent APR to a 7.74 APR. Such discounts can reduce the amount of interest owed each month and during the course of the entire life of the loan.

Loan Length

When reviewing the best solar panel loan companies, homeowners may find that these companies offer loans that can run anywhere from a couple of years to a couple of decades. Loan providers that specialize in solar panel financing are more likely to extend longer loan terms, while companies that finance solar panel installations through personal loans may offer much shorter amortization schedules. This is an important consideration to weigh, as a longer loan term can be easier to manage since the monthly payment will be lower. On the other hand, some borrowers may prefer to repay their solar panel loans as quickly as possible and will seek out financing with shorter loan terms.

Funding Time Frame

One of the benefits of unsecured loans is that funds are often disbursed in a much shorter time frame compared with mortgages and other secured loans. Homeowners who choose to use a home equity loan over a personal loan for solar panels may find that the wait time for funds to become available is significantly longer. With an unsecured solar panel loan, funds typically appear in the borrower’s account within a few days after their loan is approved. That being said, some lenders are able to disburse funds in even quicker fashion, sometimes depositing loan funds within 24 hours. Each lender will have its own set funding time frame, so homeowners who need money for a solar panel installation sooner rather than later may want to prioritize choosing a lender that offers quicker funding times.

Prequalification and Preapproval

When considering how to get a home improvement loan, including solar panel loans, many homeowners value the peace of mind that comes with prequalification and preapproval. Getting prequalified for a loan can be helpful for homeowners when they are shopping around for the best rates and loan terms since this process typically does not require a credit check or in-depth assessment of the borrower’s finances. Prequalification does not guarantee that a homeowner will qualify for a solar panel loan—let alone qualify for the particular terms that they want—but it can give them an idea of what their loan terms might look like.

The preapproval process is a bit more involved, often requiring a credit pull and income verification, but prospective borrowers will know what kind of loan they are eligible to receive with a good amount of certainty. Even among the best solar panel loan providers, not all companies offer prequalification and preapproval, but those that do often allow customers to quickly check their prequalification or preapproval status online.

Lender Fees

The largest expense that borrowers will pay on their solar panel loan is interest, but that is not the only cost to consider. Loan providers may charge a variety of lender fees that can increase the overall cost of the loan, and some of those fees could be due up front. Borrowers may need to pay an application fee when applying for a loan, for instance, or an origination fee when their loan is funded. Lenders may also charge late fees to penalize borrowers who fall behind on their loan payments. In some cases, borrowers may incur prepayment penalties if they repay their loan ahead of schedule. When considering one of the best solar panel loan providers, homeowners will want to be aware of any additional lender fees they could owe during the life of their loan.

Our Top Picks

Not all homeowners will take the same path to choosing the best solar panel loan provider. Everyone’s needs are different, and priorities will shift depending on what matters most to a particular borrower. With that in mind, the following lenders each offer their own combination of strengths and capabilities for prospective customers to consider.

Best Overall

Photo: lightstream.com

Why It Made the Cut: LightStream offers low APR options, the ability to choose when funds are deposited, and several opportunities to reduce the cost of a solar panel loan with competitive discounts.

LightStream offers solar panel loans in every state, helping homeowners across the nation secure financing for this home improvement project. In addition to its widespread availability, the company may also be able to offer competitive rates for eligible borrowers. The APR on a LightStream loan starts out at 4.99 percent, which is very low for this type of financing, and borrowers could save money on interest payments if they qualify for that lower rate.

Although LightStream customers won’t be able to check if they qualify for financing until they apply for a solar panel loan, they do have the ability to select their funding date. In some cases, borrowers may even be able to schedule their funds disbursement on the same day their loan is approved. This flexibility can be useful when homeowners are trying to coordinate their solar panel installation and secure the necessary funds ahead of time.

LightStream also offers several discounts for borrowers to save money on the total cost of a loan, such as an autopay discount that can lower a customer’s interest rate by 0.5 percentage points. Customers may find additional savings by taking advantage of LightStream’s Rate Beat Program, which not only matches competitors’ interest rates but undercuts them by 0.1 percentage points.

Specs

  • Coverage area: 50 states and Washington, D.C.
  • Maximum loan amount: $100,000
  • Annual percentage rate: 4.99 percent to 16.99 percent
  • Loan length: 36 to 120 months
  • Funding time frame: Within 24 hours

Pros

  • Low 4.99 percent APR for eligible borrowers
  • Flexible funding date
  • Rate-matching program for eligible borrowers
  • Generous autopay discount for eligible borrowers

Cons

  • No loan prequalification or preapproval

Runner-Up

The Best Solar Panel Loan Option: SoFi
Photo: sofi.com

Why It Made the Cut: SoFi can provide options for same-day funding and autopay discounts for eligible borrowers, as well as the ability to prequalify for a solar panel loan online.

SoFi offers solar panel loans through its personal loan program, featuring relatively short loan terms and quick funding time frames. According to the loan provider, many borrowers may qualify for same-day funding if the application is submitted on a business day and the loan is approved earlier in the day. SoFi also allows prospective customers to prequalify for a loan and see what terms and conditions they might qualify for without requiring a hard credit check. Prequalification is fairly uncommon for a solar panel loan program, and this feature helps homeowners shop around and find the right loan terms to suit their needs.

Homeowners may want to note that the APR on a SoFi solar panel loan starts out at 7.99 percent, which is somewhat high for a minimum APR. They may have opportunities to lower their rate with SoFi’s autopay discount, however. Customers who enroll in autopay will be able to reduce their APR by 0.25 percentage points.

Specs

  • Coverage area: 50 states and Washington, D.C.
  • Maximum loan amount: $100,000
  • Annual percentage rate: 7.99 percent to 22.73 percent
  • Loan length: 24 to 84 months
  • Funding time frame: Within 24 hours

Pros

  • Same-day funding available
  • Generous autopay discount for eligible borrowers
  • Online prequalification possible

Cons

  • High 7.99 percent minimum APR

Best Monthly Rates

The Best Solar Panel Loan Option: ezSolarLoan
Photo: ezsolarloan.com

Why It Made the Cut: With a singular focus on solar panel loans, extremely long loan terms, and instant approval for certain loan amounts, ezSolarLoan may be a good option for homeowners looking for a lender that specializes in this kind of financing.

As a company that focuses exclusively on solar panel loans, ezSolarLoan provides financing terms that often suit this type of home improvement project. For instance, the company offers relatively large loan limits to help homeowners finance solar panel installations of many sizes. These loans are somewhat unique among solar panel financing in that they are secured loans, using the solar panel equipment as collateral. As such, the lender will place a lien on the borrower’s solar panels, but it will be removed once the loan is repaid.

Because ezSolarLoan works with Community 1st Credit Union to provide homeowners with a bank loan for solar panels, borrowers will first need to sign up for membership with that financial institution. Homeowners who live outside of Washington State will also need to join the Solar United Neighbors organization to be eligible for credit union membership and solar panel financing. That extra step may be worth it, though, to take advantage of ezSolarLoan’s instant approval option, which offers immediate approval for loans up to $50,000 for eligible borrowers. The lender also offers extremely long loan terms, running anywhere from 12 to 21 years, which can help reduce monthly payments since the loan amount is stretched out over more installments. This way, homeowners can budget for this expense more easily each month until the loan is paid off.

Specs

  • Coverage area: 50 states and Washington, D.C.
  • Maximum loan amount: $100,000
  • Annual percentage rate: 5.24 percent and up
  • Loan length: 12 to 21 years
  • Funding time frame: Not listed

Pros

  • Specialty in solar panel loans
  • Long 12- to 21-year amortization schedule
  • Instant approval on loans up to $50,000 for eligible borrowers

Cons

  • Lien placed on solar panel equipment
  • Credit union membership required

Best for Secured Financing

The Best Solar Panel Loan Option: Best Egg
Photo: bestegg.com

Why It Made the Cut: With both secured and unsecured loan options, Best Egg may be a solid choice for homeowners who want to use their home equity to finance their solar panel project.

While many loan providers offer either secured or unsecured loans for solar panel financing, Best Egg stands out from the crowd by providing both options to borrowers. Homeowners who prefer an unsecured loan with terms comparable to those of a conventional personal loan can select those financing terms. Eligible homeowners may be able to tap into their existing home equity using Best Egg’s Homeowners Advantage Loan. Although borrowers will need to wait 1 to 3 days for funds to become available regardless of which option they choose, this time frame is still significantly shorter than funding times for traditional home equity loans or HELOCs.

Best Egg also provides financial health monitoring services to its customers free of charge. With notifications to alert borrowers when their credit score changes and a credit simulator to view the impact of financial decisions, borrowers can keep a closer eye on their credit score and overall financial status.

Specs

  • Coverage area: 47 states
  • Maximum loan amount: $50,000
  • Annual percentage rate: 5.99 percent to 35.99 percent
  • Loan length: 36 to 60 months
  • Funding time frame: 1 to 3 business days

Pros

  • Secured loan option available for homeowners
  • Free financial health monitoring service

Cons

  • Somewhat lengthy 1- to 3-day funding time frame

Best for Large Projects

The Best Solar Panel Loan Option: Dividend
Photo: dividendfinance.com

Why It Made the Cut: Dividend specializes in solar panel loans and offers large loan amounts for eligible borrowers, making it a good option for homeowners looking for a lender with expertise offering this particular type of financing.

Dividend is committed to providing financing for home improvement projects and offers dedicated green loans for solar panels. Although the company does not publicize the APR, loan length, or funding times for solar panel loans, its experience and specialization with solar panel financing could lead to competitive terms for eligible borrowers.

Before applying for a loan with Dividend, homeowners may want to check the company’s service area, which covers 35 states. When borrowers are ready to submit an application, they will need to contact their solar panel installation company first since all loan applications must be submitted by a professional contractor. Homeowners looking to finance a large installation may be more than willing to take those extra steps to qualify for a large solar panel loan—Dividend allows eligible homeowners to borrow as much as $125,000 for these projects, which is very high for this type of financing.

Specs

  • Coverage area: 35 states
  • Maximum loan amount: $125,000
  • Annual percentage rate: Not listed
  • Loan length: Not listed
  • Funding time frame: Not listed

Pros

  • Specialty in solar panel loans
  • High $125,000 maximum loan amount

Cons

  • Relatively small service area covering 35 states
  • APR, loan length, and funding time unavailable
  • Loan applications submitted via contractors

Also Consider

The Best Solar Panel Loan Option: Upgrade
Photo: upgrade.com

Why It Made the Cut: Upgrade allows borrowers to select their own payment date when repaying their solar panel loans. The company also provides stellar customer support when a question or issue arises.

Upgrade could be a good option for homeowners looking for flexibility and support from their solar panel loan provider. One of the company’s standout features is the option for borrowers to pick their own monthly payment date. Rather than be tied to a randomly selected payment date, customers can choose a day of the month that will fit their budget. For instance, they could schedule their payment a few days after they receive their paycheck at the end of the month. Borrowers can also change this date at any time during the life of the loan if their financial situation changes and they need to shift their debt payments around.

Self-employed borrowers should be aware that they will need to provide 2 years’ worth of tax returns as proof of income. In addition, the lender charges an origination fee that could be anywhere from 1.85 percent to 8 percent of the loan amount. If borrowers have any questions or concerns about their loan or application, though, they can rest easy knowing that Upgrade keeps a responsive customer service team on staff. Representatives are readily available over the phone and are quick to track down answers to any questions customers may have.

Specs

  • Coverage area: 50 states
  • Maximum loan amount: $50,000
  • Annual percentage rate: 6.95 percent to 35.97 percent
  • Loan length: 24 to 84 months
  • Funding time frame: 1 to 2 business days

Pros

  • Flexible borrower-selected repayment date
  • Responsive customer support

Cons

  • Somewhat high 1.85 percent to 8 percent origination fee
  • 2 years of tax returns required for self-employed borrowers

Our Verdict

Our choice for Best Overall is LightStream on account of its low introductory APR, flexible funding options, and plentiful discount opportunities. SoFi gets the nod for Runner-Up due to the availability of same-day funding for many borrowers, the ability to prequalify for a loan online, and the potential to lower a loan’s APR with autopay discounts.

How We Chose the Best Solar Panel Loan Lenders

The best solar panel loan providers can offer any number of benefits and perks to appeal to environmentally conscious homeowners. When determining the best lenders for this type of financing, we looked at each company’s service area and loan availability, as well as cost considerations such as annual percentage rates, potential discounts, and applicable lender fees. Solar panel loan terms and options were major factors we weighed as well, including the maximum amount of money that homeowners could borrow and the amount of time given to borrowers to repay their loans.

Both companies that specialize in solar panel loans and lenders that finance these installations through more generalized loans were given consideration. We also reviewed any additional features that might appeal to borrowers, such as exemplary customer support or complimentary add-on services.

Before You Choose One of the Best Solar Panel Loan Lenders

Solar panels can help homeowners save money on their utility bills, but the savings may not be significant in every situation—at least not enough to offset the cost and responsibility of taking out a multiyear loan. It’s important to check that conditions are right to maximize the production and effectiveness of solar panels before agreeing to terms with a lender. For instance, some roofs may not receive enough sunlight—either because of neighboring buildings, excessive tree cover, or slanted angles—to generate enough solar energy to make the investment worthwhile. Homeowners may also want to hold off on installing solar panels if their roof is getting on in years and is due for a major renovation or replacement in the near future.

Depending on circumstances, some homeowners may prefer to take out another type of home improvement loan, such as a home equity loan or HELOC, to finance their installation rather than use a dedicated solar panel loan. Application and funding times will almost certainly be longer with home equity–based financing—and homeowners will need to put up their home as collateral—but borrowers could receive lower interest rates in return.

Cost of Taking Out a Loan With One of the Best Solar Panel Loan Lenders

In addition to checking that solar panels will actually produce enough electricity to provide a worthwhile return on investment, homeowners may also want to consider any tax credits that could help reduce the total cost of this home improvement project. Furthermore, it may be a good idea to look into ongoing maintenance expenses ahead of time, as solar panels require routine upkeep. In some cases, homeowners may need to pay a specialist to inspect and repair their equipment on an annual basis. After making such a large initial investment, homeowners may also want to work with one of the best solar panel cleaning services to keep their equipment in good working order.

Although solar panel loans rarely—if ever—require a down payment, there may be other up-front costs such as lender fees for borrowers to cover. Homeowners can try to lower their total cost by seeking out low-interest loans for solar panels and taking advantage of available discounts. They might also consider using a solar panel loan calculator to find out exactly how much solar panel financing will cost.

Homeowners should also be aware that it may take years before solar panels start paying for themselves. As a cost-saving measure, solar panels are a long-term investment, so if homeowners want to save money on their utility bills in the short term, there may be better alternatives out there.

The Advantages of Choosing One of the Best Solar Panel Loan Lenders

Homeowners may seek out the best solar panels for their cost-saving potential and the opportunity to shrink their environmental footprint, but solar panel loans offer their own advantages as well. The best solar panel loans can help homeowners quickly and easily get the funds they need to pay for small or large installations so they’re able to start reaping the benefits of this environmentally friendly hardware as soon as possible.

  • Flexible funding and payment dates so homeowners can plan and budget accordingly.
  • Various discount opportunities to lower the total cost of solar panel financing.
  • Lengthy amortization schedules that can help minimize monthly payments.

FAQs

Because there are so many different financing options available, homeowners may not know where to begin searching for the best solar panel loans to fit their situation. On top of that, solar panels can be a huge investment—one that requires routine maintenance—so some prospective borrowers may be hesitant to take on debt for this home improvement project. By taking a look at some of the most common questions about solar panel financing, homeowners can feel more informed and empowered to make the right choice for themselves.

Q. When are solar panel loans worth it?

Homeowners struggling with high utility bills may be the most likely to come out ahead by installing solar panels and taking advantage of a solar panel loan. Houses that get more sunlight will be able to generate more solar energy to help produce the most cost savings possible.

Q. How long are solar panel loans?

The amortization schedule on a solar panel loan can run anywhere from 24 months to 21 years, depending on the loan provider.

Q. Are solar panels loans tax deductible?

Unsecured solar panel loans are not tax deductible. However, loans that are secured by the borrower’s home may qualify for a tax deduction. It may be best for homeowners to speak with a tax advisor to find out if they could be eligible for a tax deduction on their solar panel loan.

Q. How do I repay my solar panel loan?

Borrowers will repay their solar panel loan by making a monthly payment for the duration of the loan’s amortization schedule.

Q. Are solar panels recyclable?

Some solar panel components such as glass, metal, and electronics can be recycled, but they must be carefully removed and separated to do so. According to the Environmental Protection Agency (EPA), solar panel recycling is available in some locations, but it has yet to become available nationwide.

Q. What is a good interest rate for solar panels?

Depending on the lender, solar panel loan rates can start at 4.99 percent and go as high as 35.99 percent. Borrowers with strong credit and minimal existing debt could qualify for an interest rate in the single digits. Commercial solar panel loans may offer even more favorable terms and rates, but this financing is not available to residential homeowners.

Q. How can homeowners finance a solar panel installation?

In addition to dedicated solar panel loans, homeowners may also be able to use personal loans, home equity loans, HELOCs, or home improvement loans to finance their installation. As with any renovation project, it may be worth considering one of the best home improvement loans as an alternative.

Q. Does the federal government offer solar panel loans?

Although the government periodically extends grants to support solar panel installations, there are no government loans for solar panels.