Here’s How You Can Take Out A Solar Loan To Switch To Alternative Energy
Do you live in an area that gets exposed to the sun all year-round? If yes, installing solar panels can do wonders for you as they help utilize the sun’s energy to create electricity. This way, you can cut down your dependence on conventional utilities. Aside from minimizing the energy costs at your home, you can contribute towards the betterment of your environment as well. The price of solar panels is on the higher side. The cost of installation lies in the range of $10,000 to $35,000. However, you can avail solar loans so that you can access your home’s residential systems more easily. Here is a detailed explanation of how solar loans can help you handle the initial investment more efficiently.
Basics of Solar Loans
You first need to understand how solar loans work. Just like you would make use of a home improvement loan or any kind of purchase loan, a solar loan would work the same way. Through solar loans, you can purchase a residential solar system and gradually pay the money off. You can choose from a host of solar loan options. You can either choose an unsecured personal loan, avail a line of credit or a home equity loan, or secure in-house financing from a solar installation company.
You have to keep certain things in mind before you proceed. If you get a lower rate of interest, the overall cost will come down. Next, if the loan term is shorter, you will have to pay a higher amount every month. However, the overall cost will be lower. Before taking a loan, you need to consider the rate of interest, loan amount, term length, as well as credit requirements, et al. Homeowners who take up a loan to purchase solar energy systems, can also consider a federal solar tax credit. You will be receiving a credit of 26% of the total cost of installing a solar system at your home.
How to Seek the Best Solar Loan
You need to take into account some essential factors before you avail a loan. These factors will play a major role when it’s time to pay off the money. First, the monthly payment amount. In case you opt for a higher installment, you will have to pay a higher payment every month. While it will keep the overall cost low, you must consider the impact this will have on the budget you have kept aside to run your household. Second, down payment. You might or might not be asked to make a down payment when you are purchasing a solar panel.
But that depends on the type of loan you would select. Usually, when the down payments are larger, the interest rates are lower, thereby making the loan more affordable for you. Third, fees. If you are not well-informed about the fees, something or the other, such as prepayment penalties or extra fees every month aside from the interests and the principal amount, might surprise you and unsettle your monthly budget. So, make sure you have all the information beforehand.
What is the Difference Between Secured Loans and Unsecured Loans?
Secured loans generally have some collateral attached to them. The collateral offers protection to the lender. If somehow you are not able to make the payments regularly, the lender will have the right to claim the collateral that has been attached to your loan. Since the lender has this insurance, secured loans come with lower rates of interest. In addition to that, the terms will be in your favor. On the other hand, unsecured loans have no collateral attached to them. The risk for the lender is more. Therefore, the terms are not as favorable as in the case of secured loans. The rates of interest are also higher.
Where Can You Get a Solar Loan?
Suppose your state doesn’t have any program related to solar energy loans or you don’t have the eligibility for enrolment. What should do you do in that case? Check with various lending institutions, credit unions, or opt for in-house financing. However, it’s always better if you shop around and compare the different interest rates before choosing a solar lender. Always pick one that you think is perfect for you and your budget.
If you are a homeowner and have plans to go solar, you can also check with PACE or Property Assessed Clean Energy loan programs.
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