Solar Panel Loans: Compare Solar Financing Options
Solar loans fund solar panels and installation. You can use an unsecured personal loan, home equity financing or cash-out refinancing.
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Solar panels can be a cost-effective way to shift your household to a sustainable energy source.
The average solar panel system, including installation, can cost between $15,000 and $25,000, according to the Center for Sustainable Energy, but systems can last 25 to 30 years and save you thousands of dollars in electric bills over their lifetimes.
One financing option is unsecured personal loans, which have fixed interest rates and terms of two to seven years. The short repayment terms on unsecured solar loans make them one of the quickest ways to pay off the purchase so you can start saving.
You can also consider a home equity loan or line of credit or cash-out refinancing to pay for solar panels. Federal and state tax benefits are also available to help you get some of the money you spend back. If you’re not ready to commit to solar panels of your own, leasing is also an option.
Here are five lenders that offer unsecured solar loans, as well as details about other financing options.
Solar panels can be a cost-effective way to shift your household to a sustainable energy source.
The average solar panel system, including installation, can cost between $15,000 and $25,000, according to the Center for Sustainable Energy, but systems can last 25 to 30 years and save you thousands of dollars in electric bills over their lifetimes.
One financing option is unsecured personal loans, which have fixed interest rates and terms of two to seven years. The short repayment terms on unsecured solar loans make them one of the quickest ways to pay off the purchase so you can start saving.
You can also consider a home equity loan or line of credit or cash-out refinancing to pay for solar panels. Federal and state tax benefits are also available to help you get some of the money you spend back. If you’re not ready to commit to solar panels of your own, leasing is also an option.
Here are five lenders that offer unsecured solar loans, as well as details about other financing options.
Summary of Solar Panel Loans: Compare Solar Financing Options
| Lender | NerdWallet Rating | Est. APR | Loan Amount | Min. Credit Score | Learn More |
|---|---|---|---|---|---|
 LightStream Check rate on LightStream's website | Best for Solar loans | 4.49 - 20.49% | $5,000 - $100,000 | 660 | Check rate on LightStream's website |
 Upgrade Check rate on Upgrade's website | Best for Solar loans | 5.94 - 35.47% | $1,000 - $50,000 | 560 | Check rate on Upgrade's website |
 LendingClub Check rate on LendingClub's website | Best for Solar loans | 7.04 - 35.89% | $1,000 - $40,000 | 600 | Check rate on LendingClub's website |
 SoFi Check rate on SoFi's website | Best for Solar loans | 4.99 - 19.63% | $5,000 - $100,000 | 680 | Check rate on SoFi's website |
 Discover® Personal Loans Check rate on Discover's website | Best for Solar loans | 6.99 - 24.99% | $2,500 - $35,000 | 720 | Check rate on Discover's website |
Our picks for
Solar loans
on LightStream's website
LightStream
Est. APR
Loan Amount
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on LightStream's website
on Upgrade's website
Upgrade
Est. APR
Loan Amount
Min. Credit Score
on Upgrade's website
on LendingClub's website
LendingClub
Est. APR
Loan Amount
Min. Credit Score
on LendingClub's website
on SoFi's website
SoFi
Est. APR
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Min. Credit Score
on SoFi's website
on Discover's website
Discover® Personal Loans
Est. APR
Loan Amount
Min. Credit Score
on Discover's website
What to look for in an unsecured solar loan
Unsecured loans with low rates and short repayment terms can help you pay off your solar panel system quickly. In contrast, you may be making smaller payments on a home equity line of credit for 10 or more years.
Annual percentage rate: The APR is the total cost of your loan, including interest and fees. Rates on personal loans range from about 6% to 36%, with the lowest rates reserved for good- and excellent-credit borrowers with little other debt. The APR can help you make an apples-to-apples comparison between personal loans and other financing options.
Fees: Some lenders charge an origination fee, which can be 1% to 6% of the cost of the loan, and is usually taken off the amount you’re given.
Term: The amount of time you have to repay your loan helps to determine your monthly payments. With longer repayment terms, you have lower payments but you’ll pay more total interest.
Use a solar loan calculator to see how the loan's rate and term affect monthly payments and overall interest.
Pre-qualify for a solar loan
Take the steps to pre-qualify for a personal loan to see what rates and terms are available to you. This process requires a soft credit check, which doesn't impact your credit score.
» GET STARTED: Pre-qualify with multiple online lenders on NerdWallet
Solar panel tax benefits
For people who purchase and install a solar panel system, the federal government provides a 26% tax credit for solar panel installation through 2022. That credit will lower to 22% in 2023, and there isn’t a tax credit for residential solar systems scheduled after that.
For example, you could receive a $5,200 credit on a $20,000 system in 2021 with the federal tax credit alone.
You can take advantage of tax benefits as long as you own your system, no matter how you fund it.
The federal tax credit is nonrefundable, meaning if you don’t owe taxes — or owe less than the 26% credit will get you — you won’t get that money back in a refund. You can, however, carry the credit over to a future tax year.
Some states also offer tax benefits and other incentives for solar installation. You can look up your state’s offerings in the Database of State Incentives for Renewables and Efficiency.
Other types of solar loans
In-house financing
Some solar companies offer financing through third-party lenders. These loans can be similar to home improvement loans — unsecured with no down payment required. The payment plans could have lower rates than personal loans and longer repayment terms, making your monthly payment lower.
Compare a quote from your solar company with other options to find the most affordable one.
Home equity loan
If you already know how much your solar panels will cost, you can apply for a home equity loan. These loans have lower rates and longer repayment terms than unsecured loans because putting up your home as collateral reduces some of the risk for a lender.
Home equity line of credit
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 for the project, and you often have the option to only pay interest during the initial portion of the loan.
» MORE: Best home equity lines of credit
If you’re considering a home-equity option, learn the pros and cons of each before you choose.
Cash-out refinance
A cash-out refinance can get you a new mortgage at a lower rate that includes the cost of solar panels and installation. It’s a good option if current mortgage rates are lower than what you’re paying and if you can keep closing costs low.
Closing costs on a cash-out refinance can be 2% to 5% of the mortgage’s cost. That means, on the high end, a $250,000 mortgage can come with $12,500 in closing costs — which is almost the same cost as some solar panels.
Leasing or getting a power purchase agreement
If you don’t want to make a large upfront payment or are ineligible for federal and state tax credits, consider a power purchase agreement or leasing solar panels.
In both cases, you pay little or no upfront costs to essentially rent the solar panels. The owner of the panels collects rent from you and receives any available tax incentives from the government. You’re also not responsible for maintenance.
The U.S. Department of Energy has more details about the difference between a lease and power purchase agreement.
Things to consider with solar panels
Calculate your sun exposure, costs and savings. In some parts of the country, solar panels will save more money and add more value to your home than in others. 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. The average household pays about 13 cents per kilowatt-hour for 877 kilowatt-hours each month, according to 2019 data from the U.S. Energy Information Administration.
Then, figure out what size system you’ll need. You can use the Solar-Estimate calculator to see how many panels your home would need and how much energy they would generate.
Expect to make your money back over years, not months. The Center for Sustainable Energy estimates it takes six to nine years to recoup the cost of adding solar panels to your home. So your utility bill savings won’t immediately put more money in your pocket.
How long it’ll take to make the cost of the panels back depends on the system you choose, which government funding programs are available, where you live and how you decide to pay for it.
Last updated on July 28, 2021
Methodology
NerdWallet’s review process evaluates and rates personal loan products from more than 30 lenders. We collect over 45 data points from each lender, interview company representatives and compare the lender with others that seek the same customer or offer a similar personal loan product. 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. 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.
This methodology applies only to lenders that cap interest rates at 36%, the maximum rate most financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation for our star ratings. Read our editorial guidelines.
To recap our selections...
NerdWallet's Solar Panel Loans: Compare Solar Financing Options
- LightStream: Best for Solar loans
- Upgrade: Best for Solar loans
- LendingClub: Best for Solar loans
- SoFi: Best for Solar loans
- Discover® Personal Loans: Best for Solar loans
Frequently asked questions
Solar panel loans — or solar loans — are typically personal loans used to finance solar panels and their installation. These loans can have amounts between $1,000 and $100,000 and are repaid in monthly installments, typically over a two- to seven-year term. Personal solar loans are one way to fund solar panels; other options include using your home equity, searching for federal incentives or leasing if you aren't ready to buy.
» MORE: Are solar panels worth it?
Solar loans are usually unsecured personal loans you use to finance solar panels, so any bank that offers personal loans will likely let you use one for that reason. You can find solar loans at local and national banks, and some may offer rate discounts for existing bank customers.
A solar loan can be repaid over two to seven years, though some lenders may offer longer or shorter repayment terms. The longer your repayment term, the lower your monthly payments will be, while a shorter repayment term will reduce the total interest costs. Use a solar loan calculator to determine what rate and repayment term work best for your budget.
