How can I identify hidden fees in a solar contract

Key Strategies to Spot Hidden Fees in Solar Contracts

1. Scrutinize the Contract for “Dealer,” “Program,” or “Finance” Fees
Solar contracts often include additional fees labeled as “dealer fees,” “program fees,” or “finance fees” that can substantially increase the total cost beyond the advertised price. These fees are sometimes added to the principal of a loan, inflating the amount you owe without clear disclosure in the APR or overall cost breakdown.

2. Understand the Impact of Federal Tax Credits and Who Benefits
The federal Investment Tax Credit (ITC), currently about 26%, reduces your tax liability but may not be directly reflected in your contract cost. Some solar companies factor the tax credit into the loan principal, assuming you will receive it, which can lead to surprises if you do not qualify or cannot fully use the credit. This results in balloon payments or increased monthly installments later on.

3. Watch for Sales Pressure and Immediate Signing Demands
High-pressure sales tactics urging you to sign right away often precede contracts with undisclosed fees or unfavorable terms. Legitimate companies will allow you time to review the contract thoroughly, consult trusted advisors, and ask detailed questions about all costs involved.

4. Demand Detailed Quotes and Compare Multiple Offers
A clear, itemized quote should include all costs: equipment, installation, financing fees, maintenance, removal/reinstallation fees, and possible penalties. Compare several quotes to spot discrepancies or unusually low initial offers that might be offset by hidden or escalating fees later.

5. Be Aware of Potential Balloon Payments or Prepayment Penalties
Some financing contracts require large prepayments tied to the expected tax credit receipt. If the credit is not realized, you might owe significant sums unexpectedly. Also, fees for early cancellation or transferring ownership can be substantial and are often not highlighted during signing.

6. Check for Ongoing or Additional Service Fees
Some contracts include fees for maintenance, system removal during roof repairs, or administrative charges controlled by financing companies after installation, which can delay repairs or cause system downtime without clear consumer control.

7. Look for Ambiguous or Missing Information About Fees
If a contract is vague about fees or does not clearly separate cash price, loan amounts, dealer markups, or tax credit assumptions, this is a red flag. Transparency about every fee and cost component is crucial to avoid surprises.

Red Flags Indicating Hidden Fees or Potential Scams

• The contract includes fees not explained or justified in writing.
• The quoted “net cost” assumes tax credits that you may not receive.
• Monthly payments are unusually low initially but come with balloon payments later.
• The sales representative discourages you from reviewing the contract or consulting others.
• Fees labeled ambiguously as “program” or “finance” fees without details.
• Promises of “free” or heavily discounted panels tied to unclear government incentives.
• Lack of licensing, certification, or trustworthy reviews of the company.

How to Protect Yourself

• Take time to understand every line of the contract.
• Ask specifically about all extra fees, including dealer fees, installation, maintenance, and removal.
• Confirm whether the financing includes any hidden markups and how the tax credits affect your payments.
• Consult an independent expert or attorney if terms seem confusing or unfair.
• Use trusted sources (e.g., Consumer Financial Protection Bureau, Better Business Bureau) to verify company legitimacy and report suspicious practices.

By following these guidelines, you can more effectively identify hidden fees and make a well-informed decision before committing to a solar contract.

This advice is drawn from recent consumer protection investigations and expert resources highlighting common deceptive practices and how to avoid them in solar energy contracts.