Solar Loans: Compare Solar Panel Financing Options
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Solar Loans: Compare Solar Panel Financing Options
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Last updated on 08/11/2025Fact Checked
Solar panels can help reduce electric bills, but a solar energy system requires a large upfront investment. Personal loans and home equity financing are two ways to pay for solar panels.
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LightStream is a solid option for good- and excellent-credit borrowers, with no fees and a promise to beat competitors’ rates. Read our review of LightStream
Achieve personal loans can be a good debt consolidation option for borrowers with fair credit or better who qualify for a rate discount. Read our review of Achieve Personal Loans
How we chose the best personal loans
Our team of consumer lending experts follows an objective and robust methodology to rate lenders and pick the best.
30+
Lenders reviewed
We review over 35 lenders, including major banks, top credit unions, leading digital platforms, and high interest installment lenders operating across multiple states.
25+
Categories assessed
Each lender is evaluated across five weighted categories and 27 subcategories, covering affordability, eligibility, consumer experience, flexibility, and application process.
60+
Data points analyzed
Our team tracks and reassesses hundreds of data points annually, including APR ranges, fees, credit requirements, and borrower tools, ensuring up to date, accurate comparisons.
Star rating categories
We evaluate more categories than competitors and carefully weigh how each factor impacts your experience.
Affordability
25%
We review lenders’ annual percentage rate offerings and the competitiveness of each lenders’ APR range. We also assess whether a lender charges an origination fee and any opportunity for borrowers to receive a rate discount.
Customer experience
20%
We consider the experience of the consumer trying to manage a personal loan, which means accessibility of customer service representatives, whether borrowers can choose and change their payment due date, and the ability to track their loan on a mobile app.
Underwriting and eligibility
20%
We consider the rigorousness of each lender’s underwriting practices and how widely available their loans are. This category includes whether a lender does a hard credit check before providing a loan, the range of credit profiles they accept and how many states their loans are offered in.
Loan flexibility
20%
We assess how flexible lenders can be with borrowers, including whether they offer multiple loan types, personal loan amounts and repayment term options and whether they offer direct payment to creditors on debt consolidation loans.
Application process
15%
We consider the lender’s full application process, including a borrower’s ability to preview their loan offer via pre-qualification, whether basic loan information such as APR range and repayment terms are available and easy to find online and how quickly a loan can be funded after approval.
5.0
Overall score
NerdWallet’s review process evaluates and rates personal loan products from more than 30 financial technology companies and financial institutions. We collect over 60 data points and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender’s pre-qualification flow and follow up with company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. Our ratings award fewer points to lenders with practices that may make a loan difficult to repay on time, such as charging high annual percentage rates (above 36%), underwriting that does not adequately assess consumers’ ability to repay and lack of credit-building help. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.
The average solar system costs about $30,000 (approximately $20,000 after federal tax credits), according to EnergySage, a website that reviews solar installation companies.
A solar loan is an unsecured personal loan used to pay for solar panels and installation. Banks, credit unions and online lenders provide solar loans. Typical loan amounts range from $1,000 to $100,000, and annual percentage rates (APRs) typically vary from about 6% to about 36%.
Solar loans are installment loans, which means you receive the money in a lump sum and repay it in equal monthly installments over a predetermined period, typically two to seven years.
Solar loans tend to be unsecured, meaning they don’t require you to provide collateral. This means your home or solar panels aren’t at risk of foreclosure if you miss payments, but you may have to pay late fees and a higher interest rate.
Be sure to understand these solar loan features when you're looking for a low-cost solar loan that fits your budget.
Annual percentage rate
APR represents the total cost of a loan, including interest and any fees . It offers the best way to make an apples-to-apples cost comparison between loan offers and other financing options. The loan with the lowest APR is the least expensive.
Monthly payments
Affordable monthly payments are as important as getting a low rate. Be sure that loan payments fit comfortably into your budget, as missed or late payments can reduce your credit score.
Fees
Some lenders may charge an origination fee of 1% to 10% of the loan amount. For a $30,000 solar loan, for example, this could mean fees of $300 to $3,000. The lender may deduct the fee before sending you the funds, reducing the amount you actually receive.
Repayment term
The length of a loan’s repayment term affects the size of the monthly payments. Some lenders offer extended repayment terms specifically for home improvement projects. Although loans with longer repayment terms have lower monthly payments, they result in higher total interest costs.
Get a firm cost estimate. Compare bids from multiple solar panel installation companies. Knowing how much your solar system will cost will help you figure out how much to borrow.
Calculate solar loan payments. Use a solar loan calculator to determine what APR and repayment term will get you an affordable monthly payment.
Check your rate. Many lenders offer pre-qualification, which lets applicants preview their potential loan rate, amount, monthly payment and repayment term. This usually requires only a soft credit pull, so you can review multiple offers before applying.
Apply. Once you accept a loan offer, the lender may require documents to verify your employment, income, address and other information. Have your W-2s and tax documents ready to make the application process go smoothly.
Get funded. If approved, expect to receive funds within a few days.
The federal government offers a 30% tax credit to homeowners who purchase and install a new solar panel system in their homes by 2032. The federal solar panel tax credit decreases to 26% in 2033 and 22% in 2034.
For example, if you install solar panels in 2025, you could receive a $6,000 credit on a $20,000 system with the federal tax credit alone.
Tax credits reduce your tax liability and aren't the same as tax deductions or tax refunds. Tax credits work similarly to gift cards: if you get a $6,000 credit, you can apply it to your tax bill to reduce how much you owe by $6,000. And like gift cards, this credit is nonrefundable, meaning if you don’t owe taxes, or owe less money than the tax credit, you won’t get that leftover money back in cash. You may, however, be able to carry any unused tax credit amount to a future tax year.
You can take advantage of tax benefits if you own your system, no matter how you pay for it.
Some solar companies offer financing through third-party lenders. These loans can be similar to personal loans — unsecured with no down payment required. The payment plans could have lower rates and longer repayment terms than personal loans, making your monthly payment lower.
Compare a quote from a solar company with other options to find the least expensive one.
Home equity loan
If you know how much your solar panels will cost, you can apply for a fixed-rate home equity loan. These loans typically have lower rates and longer repayment terms than unsecured loans, as putting your home up as collateral reduces the lender's risk.
A HELOC is another low-rate option that is secured by your home. It’s more flexible than a home equity loan because you can draw on funds as you need them, and you often have the option to pay only interest during the initial phase of the loan. Unlike personal and home equity loans, HELOCs have variable rates.
A cash-out refinance is a second mortgage that’s larger than your current mortgage. You use the new loan to pay off the old loan and then “cash out” the difference to purchase solar panels. It can be a good option if current mortgage rates are lower than what you’re paying and if you can keep closing costs low.
Closing costs can range from about 2% to about 5% of the mortgage amount. That means a $350,000 mortgage can have $17,500 in closing costs — more than half the cost of installing a new solar panel system.
In both cases, you pay little or no upfront costs to essentially rent and use the solar panels. The owner of the panels collects payment from you, as rent or through usage, and receives federal tax credits or any available tax incentives from the government.
Here’s how to determine whether solar panels are worth the investment.
Calculate your sun exposure, costs and savings. Whether and how much solar panels will affect your electricity bill depends on where you live. For example, someone in Seattle might not get the same value from solar panels as someone in Phoenix because of the disparity in sunshine.
To estimate your savings, you first need to know how many kilowatt-hours you use and how much you’re paying for them. In 2022, the average household used 899 kilowatt-hours each month. In April 2025, residential customers paid an average of 18.1 cents per kilowatt-hour.
Then, figure out what size system you’ll need. You can use a solar savings calculator to see how many panels your home would need and how much energy they would generate.
Estimate your payback period. Your solar loan payback period is the time it takes for your electric bill savings to match the cost of installing the system. This will be years, not months.
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Nerdy Tip
For example, if you pay $17,000 for new solar panels and they save you $1,500 per year on your utility bills, your payback period would be a little over 11 years.
Other factors determining your payback period include maintenance costs and whether utility rates change in your area.
Frequently asked questions
What is the cheapest way to finance solar?
The cheapest solar panel financing option is typically the one with the lowest annual percentage rate. The lowest rates go to borrowers with high credit scores and incomes.
How are solar loans structured?
You get an unsecured solar loan in a lump sum and repay it, with interest, in fixed monthly installments. Repayment terms are typically from two to seven years, and payments usually start one month after the loan is funded. Use a solar loan calculator to calculate monthly payments.
What type of loan is a solar panel loan?
Solar loans are typically unsecured personal loans used to finance the purchase and installation of solar panels. These loans can range from $1,000 to $100,000. Personal solar loans are one way to fund solar panels; other options include home equity or taking advantage of federal incentives. You might lease solar panels if you aren't ready to buy.
