The typical repayment term for a solar loan generally ranges from about 8 to 20 years, with some loans extending up to 25 years. Borrowers most commonly choose loan terms around 12 or 20 years, with a slight preference toward 12-year terms.
Key details about solar loan terms include:
- Loan terms can be set anywhere from 5 to 25 years, but the range of 8-20 years is most common.
- Shorter loan terms (e.g., around 8-12 years) mean higher monthly payments but less total interest paid and greater overall savings over the solar system’s life.
- Longer loan terms (e.g., 20-25 years) typically have lower monthly payments but higher total interest costs and higher overall cost of ownership.
- Some solar loans allow a balloon or lump-sum payment within the first 12-18 months to account for the federal solar tax credit, after which payments may be re-amortized (adjusted).
- Many lenders allow penalty-free prepayments, so borrowers can pay off their loans early without fees.
In summary, solar loan terms are flexible but commonly span 12 to 20 years. Borrowers balance monthly affordability against total interest cost and often choose a term aligning the loan payments with expected energy savings from their system.
This range offers homeowners options to either pay off their solar panels relatively quickly for maximum lifetime savings or spread payments out longer to reduce monthly costs.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-is-the-typical-repayment-term-for-a-solar-loan/
