Financing Your Solar System
The future is bright for homes switching to solar. However, are you fearful of the financial burden? Paying for your solar isn’t as daunting as it’s often perceived. There are a variety of financing options available to new solar panel owners, each with a different set of pros that could work well for you.
Be smart in your approach to solar installation. Do your research to find the most suitable repayment plan and ensure you’re utilising your solar system to its full potential from day one. This will allow you to start saving on your power bill immediately, freeing up funds to pay for your panels.
To find the best financing option, you should begin by understanding what’s available and what will be the most cost effective in your current financial situation.
Let’s explore your options!
Leasing your solar panels allows you to make a fixed monthly repayment, with the relevant interest rate applied. The leasing company will own your solar system until you’ve paid it off in full. When considering the costs, compare your monthly lease repayments with the price of your system to ensure the interest isn’t going to send you broke. Also take into account the future of your living arrangements. If you decide to sell your home, the balance usually cannot be transferred to the new home owner and you’ll be required to pay the remainder of what you owe.
Solar leasing is usually a better option for large solar systems that are installed on commercial or industrial properties.
Add To Your Mortgage
Combining your solar system loan with your current home loan can be a relatively cost-effective option if you’re committed to making decent, regular repayments. If you generally only make the minimum repayment, your solar loan could almost double over the term of your mortgage. On the plus side, adding to your mortgage means a much lower interest rate and you won’t need to pay the fees associated with taking out a new loan.
Green loans are becoming increasingly popular in Australia and are now available through many financial institutions. They’re a type of unsecured, personal loan designed to fund the purchase of energy-efficient products. A green loan will have a lower interest rate and upfront fees, as well as no early repayment fees. Sounds pretty great, but what’s the catch? You need a reasonable credit score to be eligible for a green loan. If yours is good and paying cash up front isn’t an option, then a green loan could be your ticket.
Personal loans are another good option. They’re a little easier to attain than a green loan and you’ll also have cash-in-hand, creating an opportunity to source the best panels for your home at the best price. They can be hard to come by, but do a little digging and you may be able to find a decent deal on a personal loan. If you’re in a position to pay it off quickly, financing your solar panels with a personal loan can be a cost-effective option.
Interest Free Loans
While it sounds good in theory, it probably shouldn’t be your first choice for financing. No interest on repayments and no upfront costs sounds tempting, but what you’ll often find with these loans is that you’ll pay a higher retail price. This excess bypasses the solar installer and goes straight to the lender. Unless your credit rating is low and you’re ineligible for a green or personal loan, we recommend exploring other financing options before committing to a ‘no interest’ loan.
It’s the odd one out in the list, but still an option – and a favourable one at that. If you have cash set aside and you’re looking to make an investment, solar panels are a great option. A return on investment isn’t far off and your system will generate a tax-free return that’s higher than any bank interest rates. It’s a smart investment for your bank account and for the future of the planet!
Weigh up your options, consider your credit history and plan for repayments you can comfortably afford. Gather your information and decide on the best way to finance your solar system. If you’re ready to learn more about installation, get in touch with our team today!