Solar power is an incredible and efficient way to harness the sun’s natural energy. It’s perfect for lowering utility bills and improving your home’s energy efficiency. But there’s a catch: solar panel installation can be expensive.
Upfront costs, taxes, and purchase agreements can be confusing if you’re trying to decipher how paying for a solar panel system works. However, there are solar system financing options that can make your switch to solar power much more affordable.
We’re here to explain the countless benefits of solar system financing plans so you can save money.
Article At A Glance
Residential Solar System Financing Costs
How much do residential solar systems cost? It’s a fair question that many homeowners ask. The average cost per watt of power is $3.10, and given that homes use thousands of watts, you can expect your costs to hit four or five digits.
For instance, if your home needs six kilowatts of power to function effectively, you’ll have to pay $18,600. This cost can vary depending on where you call home; some states have average cost-per-watt rates lower than $3.10.
What Affects Solar Panel Costs?
Now that you understand how much solar panels cost, you should know specific factors that can impact how much you’ll pay.
Do you live in a sunny climate? If so, you’ll reap massive savings that will quickly recoup your start-up costs.
Moreover, there are numerous government tax incentives that you can take advantage of to lower your costs. Some localities provide partial reimbursement for installation costs, while others might let you write off your fees on your taxes. It depends on where you live.
Homeowners living in larger homes often pay more for solar panels, which makes sense; the more energy you need, the more you’ll have to pay.
Solar Financing Options
There are many solar financing options available for you to choose from. While solar companies’ financing offerings vary from company to company, you can expect the following options.
Pay upfront for your solar system in full if you have cash to spare. You’ll have immediate ownership of your solar panel system. Best of all, you can take full advantage of tax incentives immediately. Your credit score will soar, and you won’t worry about interest rates anytime soon.
But cash payment is only for some. While we recommend cash payment for homeowners planning to live in their houses long-term, you’ll lose money if you move out soon. So consider alternatives if a move is on the agenda.
Solar Panel Loans
One of the best benefits of solar system financing is flexibility. Need to be interested in an upfront cash payment? No problem; simply take out a solar panel loan.
When you get a solar panel loan, you’ll establish terms and conditions with a provider and then pay monthly installments with interest. While it’ll take time to repay your loan fully, you’ll have power as soon as possible.
You still own your panels like a cash payment, so you can immediately use tax credits and incentives. But, you must furnish any maintenance costs, as your loan won’t cover repairs and cleaning services.
Solar Panel Leases
Solar leases are an excellent choice for homeowners interested in renting solar panels. You’ll sign a contract with a provider instead of paying upfront or with a loan. Much like any other rental lease, you will pay fixed monthly fees.
How long would your lease last? Typically, homeowners sign contracts that last anywhere between 20 to 25 years. Your provider will handle maintenance and repair costs during that time, no questions asked.
We recommend solar panel leases for folks who don’t want to own solar panels but still want to reap their benefits. That said, there is a catch: you can’t use tax incentives or rebates with solar panel leases. And if you’re planning on moving anytime soon, you’ll have to either convince buyers to pay the lease or continue to pay it yourself.
Power Purchase Agreements (PPAs)
If you’ve previously considered the benefits of solar system financing, you might have encountered a strange phrase: power purchase agreements. Power purchase agreements, or PPAs, are simply a different type of solar lease. These leases lack a fixed rate, so your rates might vary.
PPAs will cost less than what you’d be paying for electricity. But unfortunately, while PPAs have a low monthly rate, this rate can increase over time; even worse, you won’t get access to solar rebates and incentives. You also won’t have to cover maintenance or repair costs.
You’re paying for energy use, not the solar panel system. While this might appeal to some homeowners, exercise caution and research before signing a contract.
You can use part of your home’s equity to finance solar panel installation. This is one of the benefits of solar system financing that many homeowners must be aware of.
You can use your mortgage provider to cover part or all of your solar panel installation costs. Some homeowners choose HELOC plans or home equity lines of credit. So, if you sign onto a HELOC contract, you can leverage your mortgage much like a credit card with nominal interest rates to boot.
Cash-out refinance plans take time, and some mortgage providers might need to offer them. But it always helps to check with your provider.
Professional Solar Financing Experts in Chicago
So, you now understand the myriad of benefits of solar system financing. When you work with the professionals at RxSun, you’ll get expert advice on which solar financing best suits your needs. But selecting the right plan can be tricky. We’re here to walk you through the process and make obtaining financing easier.
We proudly serve homeowners in the greater Chicago area. You can call us today at (800) 607-9786.