Solar Panel Loans: Compare Solar Financing Options
Solar loans fund the purchase and installation of solar panels. Compare unsecured personal loans, home equity financing and cash-out refinancing to find the best way to pay for solar panels.
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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 $15,000 to $25,000, according to the Center for Sustainable Energy, but a system can last 25 to 30 years and save you thousands of dollars on electric bills over its lifetime.
Solar loans are unsecured personal loans with fixed interest rates and terms from two to seven years. Their short repayment terms allow you to clear the debt sooner.
Here are five lenders that offer unsecured solar loans, as well as details about other financing options.
Why trust NerdWallet? NerdWallet’s editorial team has reviewed over 35 personal loan providers and compared them to find the best solar loans. We’ve selected these lenders based on features like loan amounts, rates, credit score requirements, star ratings and payment flexibility.
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 $15,000 to $25,000, according to the Center for Sustainable Energy, but a system can last 25 to 30 years and save you thousands of dollars on electric bills over its lifetime.
Solar loans are unsecured personal loans with fixed interest rates and terms from two to seven years. Their short repayment terms allow you to clear the debt sooner.
Here are five lenders that offer unsecured solar loans, as well as details about other financing options.
Why trust NerdWallet? NerdWallet’s editorial team has reviewed over 35 personal loan providers and compared them to find the best solar loans. We’ve selected these lenders based on features like loan amounts, rates, credit score requirements, star ratings and payment flexibility.
Solar Panel Loans: Compare Solar Financing Options
| Lender | NerdWallet Rating | Est. APR | Loan amount | Min. credit score | Learn More |
|---|---|---|---|---|---|
 Best Egg Get rate on Best Egg's website | Best for Solar loans | 5.99- | $2,000- | 600 | Get rate on Best Egg's website |
 SoFi Get rate on SoFi's website | Best for Solar loans | 6.99- | $5,000- | 680 | Get rate on SoFi's website |
 LightStream Get rate on LightStream's website | Best for Solar loans | 4.99- | $5,000- | 660 | Get rate on LightStream's website |
 Upgrade Get rate on Upgrade's website | Best for Solar loans | 5.44- | $1,000- | 560 | Get rate on Upgrade's website |
 Discover® Personal Loans Get rate on Discover's website | Best for Solar loans | 5.99- | $2,500- | 720 | Get rate on Discover's website |
 PenFed Credit Union Personal Loan See my rates on NerdWallet's secure website | Best for Solar loans | 4.99- | $600- | None | See my rates on NerdWallet's secure website |
 Alliant Personal Loan See my rates on NerdWallet's secure website | Best for Solar loans | 6.24- | $1,000- | None | See my rates on NerdWallet's secure website |
Our picks for
Solar loans
on NerdWallet's secure website
PenFed Credit Union Personal Loan
Est. APR
4.99-Loan amount
$600-Min. credit score
Noneon NerdWallet's secure website
on NerdWallet's secure website
Alliant Personal Loan
Est. APR
6.24-Loan amount
$1,000-Min. credit score
Noneon NerdWallet's secure website
What to look for in an unsecured solar loan
The best solar loan is usually the least expensive one. Compare these features to find a low-cost loan:
Annual percentage rate: The APR is the total cost of your loan, including interest and fees. Personal loan rates are typically between 6% and 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 from 1% to 10% of the cost of the loan; the origination fee is usually taken off the loan amount.
Term: The loan’s repayment term helps determine the monthly payments. Loans with longer repayment terms have lower payments but cost more in overall 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
The federal government provides a 26% tax credit for people who purchase and install a solar panel system through 2022. That credit will decrease to 22% in 2023. There's no tax credit scheduled for residential solar systems after that.
If you install solar panels in 2022, you could receive a $5,200 credit on a $20,000 system with the federal tax credit alone.
You can take advantage of tax benefits as long as you own your system, no matter how you finance it.
The federal tax credit is nonrefundable, meaning if you don’t owe taxes — or owe less money 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 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 already know how much your solar panels will cost, you can apply for a fixed-rate home equity loan. These loans have lower rates and longer repayment terms than unsecured loans because putting up your home as collateral lowers the risk for a lender.
» MORE: Best home equity loans
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, and you often have the option to pay only interest during the initial portion of the loan. Unlike personal and home equity loans, HELOCs have variable rates.
» MORE: Best home equity lines of credit
Cash-out refinance
A cash-out refinance is a new mortgage that’s larger than your current mortgage. You use the new loan to pay the old loan and “cash out” the difference to purchase solar panels. 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 can be from 2% to 5% of the mortgage’s cost. That means a $250,000 mortgage can cost $12,500 in closing costs — which is almost as expensive as some solar panels.
» MORE: Best cash-out refinance lenders
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. Solar panels will help people in some parts of the country save more money than 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. In 2020, the average household used 893 kilowatt-hours each month, according to the U.S. Energy Information Administration. In January 2022, homeowners paid an average 14 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.
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.
The timeline 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 pay for your system.
Last updated on April 12, 2022
Methodology
NerdWallet’s review process evaluates and rates personal loan products from more than 35 financial institutions. 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 more about our ratings methodologies for personal loans and our editorial guidelines.
To recap our selections...
NerdWallet's Solar Panel Loans: Compare Solar Financing Options
- Best Egg: Best for Solar loans
- SoFi: Best for Solar loans
- LightStream: Best for Solar loans
- Upgrade: Best for Solar loans
- Discover® Personal Loans: Best for Solar loans
- PenFed Credit Union Personal Loan: Best for Solar loans
- Alliant Personal Loan: Best for Solar loans
Frequently asked questions
The best way to finance solar panels is with a loan that has the lowest annual percentage rate. If you have equity in your home, that may mean getting a home equity loan or line of credit. If not, a personal loan can be used for solar panels. The lowest rates often go to borrowers with high credit scores and incomes.
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 to three months after the loan is funded. Use a solar loan calculator to calculate monthly payments.
Solar panel loans — or solar loans — are typically personal loans used to finance the purchase and installation of solar panels. These loans can have amounts from $1,000 to $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, federal incentives or leasing if you aren't ready to buy.
» MORE: Are solar panels worth it?
