Solar loan interest rates generally range from about 3.99% to 16.99%, depending on the lender and the borrower’s creditworthiness, with some specialized solar loans offering rates as low as around 4.5% to 6.25% up to about 8% APR for longer fixed terms such as 15 years. For example, Star One Credit Union offers solar loans with fixed interest rates between 6.25% and 8.00% APR over terms up to 15 years. Some specialized programs like the Massachusetts MySolar loan provide rates from 4.49% to 5.99%, with terms of 5 to 15 years.
In contrast, traditional unsecured personal loans typically have a much wider APR range, from about 7.9% up to 35.99%, with origination fees that can add to the cost. This means that solar loans often come with lower interest rates than general personal loans, particularly when financed through credit unions or specialized solar financing programs that offer competitive fixed rates tailored for solar projects. Home equity loans, which are secured by your home, may offer even lower interest rates than solar loans but come with the risk of foreclosure if payments are missed.
To summarize:
| Loan Type | Typical Interest Rate Range (APR) | Term Length | Notes |
|---|---|---|---|
| Solar Loans | ~3.99% – 16.99% (often 4.5%–8%) | 5–20 years | Often fixed rates; some loans allow reamortization; no collateral required (unsecured) |
| Personal Unsecured Loans | 7.9% – 35.99% | Usually <10 years | Higher rates, possible origination fees 0–8%; unsecured |
| Home Equity Loans | Typically lower than solar loans | Varies | Secured loan with home as collateral; lower rates but higher risk |
Solar loans can also often be structured to take advantage of solar tax credits (currently 30% federal tax credit through 2032), which effectively reduce the overall cost of the system, something traditional loans do not factor in.
Overall, solar loans tend to have more competitive and often lower interest rates than traditional unsecured personal loans, especially when borrowers use programs designed specifically for solar financing or secure loans like home equity loans. This makes solar loans a popular financing option for spreading out the cost of solar panel systems with manageable payments and lower interest expense compared to general personal loans.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-the-interest-rates-of-solar-loans-compare-to-those-of-traditional-loans/
