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Solar Panels 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.

Annie MillerberndMarch 3, 2020
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If you want to save on your utility bills and shift to a sustainable source of energy, solar panels can be a cost-effective option.

The average solar panel system, including installation, can cost between $15,000 and $25,000, according to the Center for Sustainable Energy. The center estimates it takes an average of six to nine years to recoup the costs.

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 Panels Loans: Compare Solar Financing Options

Our picks for

Solar loans

These lenders offer low-rate loans, and all have a maximum loan limit high enough for most solar panel additions.

Lightstream

on LightStream's website

LightStream

5.0

NerdWallet rating 
Lightstream

Min. Credit Score

660

Est. APR

4.49 - 20.49%

Loan Amount

$5,000 - $100,000

on LightStream's website


Min. Credit Score

660

Key facts

LightStream offers low-rate personal loans with repayment terms up to seven years.

Pros

  • No fees.

  • Competitive rates among online lenders.

  • Rate discount for autopay.

  • Special features including rate beat program and satisfaction guarantee.

Cons

  • No option to pre-qualify on its website.

  • Requires several years of credit history.

Qualifications

  • Minimum credit score: 660.

  • Several years of credit history; excellent-credit borrowers have at least five, according to LightStream.

  • Multiple account types within your credit history, like credit cards, a car loan or other installment loan and a mortgage.

  • Strong payment history with few or no delinquencies.

  • Investments, retirement savings or other evidence of an ability to save money.

  • Enough income to pay existing debts and a new LightStream loan.

Available Term Lengths

2 to 7 years

Fees

  • Origination fee: None.

  • Late fee: None.

Disclaimer

Your loan terms are not guaranteed and may vary based on loan purpose, length of loan, loan amount, credit history and payment method (AutoPay or Invoice). AutoPay discount is only available when selected prior to loan funding. To obtain a loan, you must complete an application on LightStream.com, which may affect your credit score. You may be required to verify income, identity and other stated application information. Payment example: Monthly payments for a $5,000 loan at 12.8% APR with a term of 3 years would result in 36 monthly payments of $168. Some additional conditions and limitations apply. Advertised rates and terms are subject to change without notice. SunTrust now Truist is an Equal Housing Lender. © 2020 Truist Financial Corporation. SunTrust®, Truist, LightStream®, the LightStream logo, and the SunTrust logo are service marks of Truist Financial Corporation. All rights reserved. All other trademarks are the property of their respective owners. Lending services provided by SunTrust now Truist Bank.
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Upgrade

on Upgrade's website

Upgrade

5.0

NerdWallet rating 
Upgrade

Min. Credit Score

580

Est. APR

6.94 - 35.97%

Loan Amount

$1,000 - $50,000

on Upgrade's website


Min. Credit Score

580

Key facts

Upgrade offers personal loans plus credit-building tools; you'll need strong cash flow to qualify.

Pros

  • Allows secured, co-signed and joint loans.

  • Offers rate discount with direct payment to creditors on debt consolidation loans.

  • Rate discount for autopay.

Cons

  • Charges origination fee.

  • Charges late fee.

Qualifications

  • Minimum credit score: 580.

  • Minimum annual income: None; average borrower income is $87,000.

  • Minimum credit history: 3 years.

  • Minimum number of accounts on credit history: 2.

  • Minimum monthly free cash flow: $800.

  • Maximum debt-to-income ratio: Varies between 55% and 65% including the loan you’re applying for and mortgage payments. To see your post-loan DTI, calculate your monthly payments on a personal loan, and then add them to your debt-to-income calculation.

  • Average loan amount is $10,000.

  • Average repayment term is 40 months.

Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 2.9% to 8%.

Disclaimer

Personal loans made through Upgrade feature APRs of 6.94%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by Upgrade's lending partners. Information on Upgrade's lending partners can be found at https://www.upgrade.com/lending-partners/. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds should be available within four (4) business days. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor.
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Lending Club

on LendingClub's website

LendingClub

4.0

NerdWallet rating 
Lending Club

Min. Credit Score

600

Est. APR

10.68 - 35.89%

Loan Amount

$1,000 - $40,000

on LendingClub's website


Min. Credit Score

600

Key facts

LendingClub offers personal loans for borrowers with fair credit. Joint or single applications are accepted.

Pros

  • Offers co-signed and joint loan options.

  • Offers direct payment to creditors with debt consolidation loans.

  • Soft credit check with pre-qualification.

Cons

  • Borrowers can only choose from two repayment term options.

  • Rates are high compared to other online lenders.

  • Charges an origination fee.

Qualifications

  • Minimum credit score of 600. LendingClub uses FICO 8 credit scoring model.

  • Minimum credit history of three years.

  • Debt-to-income ratio of less than 40% for single applications, 35% combined for joint applicants.

Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 1% to 6%

  • Late fee: Greater of $15 or 5% of payment after 15-day grace period.

Disclaimer

All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history. The APR ranges from 10.68% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 9.56% and a 5.00% origination fee of $300 for an APR of 13.11%. In this example, you will receive $5,700 and will make 36 monthly payments of $192.37. The total amount repayable will be $6,925.32. Your APR will be determined based on your credit at time of application. The origination fee ranges from 2% to 6% (average is 4.86% as of 7/1/2019 – 9/30/2019). In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,001 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer. Loans require sufficient investor commitment before they can be funded or issued.
Read Full Review
SoFi

on SoFi's website

SoFi

5.0

NerdWallet rating 
SoFi

Min. Credit Score

680

Est. APR

5.99 - 20.69%

Loan Amount

$5,000 - $100,000

on SoFi's website


Min. Credit Score

680

Key facts

SoFi offers good-credit borrowers flexible payment options and unemployment protection that lets you defer your loan payments if you lose your job.

Pros

  • No fees.

  • Offers co-sign and joint loan options.

  • Rate discount for autopay.

  • Offers unemployment protection.

  • Provides mobile app to manage your loan.

Cons

  • No secured loan option.

Qualifications

  • Must legally be an adult in your state.

  • Must be a US citizen, permanent resident or visa holder.

  • Must be employed, have sufficient income or have an offer of employment to start within the next 90 days.

Available Term Lengths

2 to 7 years

Fees

  • Origination fee: None.

  • Late fee: None.

Disclaimer

Fixed rates from 5.99% APR to 20.69% APR (with AutoPay). SoFi rate ranges are current as of January 19, 2021 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
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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 to 20 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 debt. When comparing loans, be sure to compare APRs, rather than just interest rates, to make a sound comparison.

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. If you get a $10,000 loan with a 3% origination fee, the lender will keep $300 of the loan.

Terms: 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.

Pre-qualify for a solar loan

Take the steps to pre-qualify for a personal loan on NerdWallet to see what rates and terms are available to you. This process typically involves a soft credit check, which doesn't impact your credit score.

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 in 2020. That credit will lower to 22% in 2021 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 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

Home equity loan

If you already know how much your solar panels will cost, you can apply for a home equity loan. Since borrowers take on more risk by putting the home up as collateral with a home equity loan, it has lower rates and longer repayment terms than unsecured 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 for the project, and you often have the option to only pay interest during the initial portion of the loan.

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 914 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 you 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.

A previous version of this article incorrectly stated whether the energy tax credit could be applied beyond the year the solar panels are installed. This article has been corrected. 

Last updated on March 3, 2020

Methodology

NerdWallet's ratings for personal loans award points to lenders that offer consumer-friendly features, including soft credit checks, no fees, transparency of loan rates and terms, flexible payment options, accessible customer service, reporting of payments to credit bureaus and financial education. We also consider the number of complaints filed with agencies like the Consumer Financial Protection Bureau. This methodology applies only to lenders that cap interest rates at 36%, the maximum rate financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation of any sort for our reviews.

To recap our selections...

NerdWallet's Solar Panels Loans: Compare Solar Financing Options