Typical repayment terms for solar loans vary, but generally, they fall within the following ranges:
- Loan Terms: Solar loan terms typically range from 8 to 25 years, with 8 to 20 years being more common. Borrowers often prefer 12-year or 20-year terms for their solar loans.
- Interest Rates: Interest rates for solar loans can be as low as 2.99% APR for unsecured loans with dealer fees, while secured solar loans might have higher rates, such as between 7.49% and 8.24%. Generally, a good interest rate is between 4% and 8%.
- Types of Loans:
- Amortized Loans: These involve fixed monthly payments over the term of the loan.
- Re-amortized Loans: These allow for a lump sum payment (often using the federal solar tax credit) to reduce monthly payments after the payment is made.
- Repayment Dynamics:
- Longer Terms: Lower monthly payments but a higher total cost due to more interest paid.
- Shorter Terms: Higher monthly payments but a lower total cost and less interest paid.
- Prepayment Options: Most solar loans allow for prepayment without penalties, allowing borrowers to pay off the loan early if they wish.
- Payment Structures: Some loans may include a balloon payment option, usually tied to the federal solar tax credit, which borrowers can use to reduce their loan principal within a year or two after installation.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-typical-repayment-terms-for-solar-loans/
