When reviewing a solar contract to avoid hidden fees, focus on the following key elements:
1. Watch for Dealer, Program, or Finance Fees
- Many contracts include additional fees labeled as “program,” “dealer,” or “finance” fees. These can add 20-30% or more to the cost of the loan and often increase the total price well above the cash price of the solar project.
- These fees are sometimes hidden in the principal loan balance and may not be clearly disclosed in the Annual Percentage Rate (APR).
2. Scrutinize Financing Terms
- Check if the loan principal assumes you will receive the federal Investment Tax Credit (ITC). Some lenders present the loan amount as a “net cost” that already factors in the 30% tax credit, which you might not qualify for immediately or at all, potentially leading to balloon payments or unexpectedly high monthly bills.
- Be cautious of balloon payments or large lump sums due mid-loan that correspond to expected tax credits.
3. Understand Soft Costs and Their Impact
- Soft costs—including sales and marketing fees, labor, permits, inspections, and supply chain expenses—can constitute a large part of your total price. These costs are often embedded in the contract or quoted prices but may not be itemized separately.
- Verify what fees cover overhead, permitting, and administrative tasks, as they can add thousands to the total cost.
4. Confirm Ongoing Costs
- Ask about additional, ongoing expenses such as system insurance, internet monitoring fees (if your system requires internet for monitoring), and unavoidable utility charges that remain even after solar installation (e.g., customer service or grid connection fees). These costs can affect your long-term savings but are easily overlooked.
5. Beware of Exaggerated Savings Claims
- Contracts or sales pitches may promise that the system will “eliminate” your electric bill or completely cover financing costs. These claims might be misleading, as savings heavily depend on your location, system size, and electricity usage.
- Confirm expected savings with independent sources or your utility.
6. Thoroughly Read and Understand the Contract
- Carefully review all contract details, looking for fine print that references fees, penalties, or obligations not discussed verbally.
- Do not rush signing; reputable companies provide time for you to evaluate terms without pressure.
7. Check Company Reputation and References
- Research the installer’s reputation through reviews, Better Business Bureau ratings, and customer references to avoid companies with histories of hidden fees or scams.
Summary Table of What to Look for in Your Solar Contract
| Key Area | What to Check | Why It Matters |
|---|---|---|
| Dealer/Finance Fees | Ask for clear disclosure of all fees and markups | Fees can add 20-30%+ to loan cost |
| Loan Terms & Tax Credit Assumptions | Confirm if loan amount includes tax credit; verify balloon payment terms | Avoid unexpected large payments or higher monthly costs |
| Soft Costs Breakdown | Get details on sales, permits, labor, and overhead fees | Understand full cost drivers |
| Ongoing Costs | Insurance, monitoring internet fees, utility charges | Ensure full ownership cost is clear |
| Savings Claims | Verify promised savings with independent sources | Avoid misleading financial projections |
| Contract Fine Print | Read all clauses carefully; confirm no hidden penalties | Prevent surprises after signing |
| Installer Reputation | Research reviews, BBB, references | Avoid scammers or unethical practices |
By carefully examining these contract areas and asking direct questions about fees and terms, you can protect yourself from hidden costs and make a better-informed investment in solar energy.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-should-i-look-for-in-a-solar-contract-to-avoid-hidden-fees/
