Solar Loans: Compare Solar Panel 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.

Annie Millerbernd
Written by
Last updated on December 13, 2023
Edited by
✅ Fact checked and reviewed
Kim Lowe
Edited by
✅ Fact checked and reviewed

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SoFi Personal Loan
SoFi Personal Loan
SoFi Personal Loan
5.0
NerdWallet rating

SoFi offers online personal loans with consumer-friendly features for good- and excellent-credit borrowers.

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Solar Loans: Compare Solar Panel Financing Options

🏆 Top 3 most visited
SoFi
SoFi Personal Loan
🏆 Top 3 most visited
Best for Solar loans
5.0
Rate discount
Est. APR
8.99-29.99%
Loan amount
$5K-$100K
Min. credit score
None
Visit Lender
on SoFi's website
on SoFi's website
Check Rate
on NerdWallet
on NerdWallet
View details
🏆 Top 3 most visited
Lightstream
LightStream
🏆 Top 3 most visited
Best for Solar loans
4.5
Rate discount
Est. APR
6.99-25.49%
Loan amount
$5K-$100K
Min. credit score
660
BestEgg
Best Egg
Best for Solar loans
Secured loans
Wide range of loan amounts
Est. APR
8.99-35.99%
Loan amount
$2K-$50K
Min. credit score
600
🏆 Top 3 most visited
Upgrade
Upgrade
🏆 Top 3 most visited
Best for Solar loans
Rate discount
Est. APR
8.49-35.99%
Loan amount
$1K-$50K
Min. credit score
560
Lending Club
LendingClub
Best for Solar loans
Flexible payments
Est. APR
8.98-35.99%
Loan amount
$1K-$40K
Min. credit score
600
Check Rate
on NerdWallet
on NerdWallet
Navy Federal Credit Union Personal Loan
Navy Federal Credit Union Personal Loan
Best for Solar loans
Est. APR
7.49-18.00%
Loan amount
$250-$50K
Min. credit score
None
Achieve
Achieve Personal Loans
Best for Solar loans
Rate discount
Est. APR
8.99-35.99%
Loan amount
$5K-$50K
Min. credit score
620
SoFi
🏆 Top 3 most visited
SoFi Personal Loan
Visit Lender
on SoFi's website
on SoFi's website
Check Rate
on NerdWallet
on NerdWallet
Best for Solar loans
🏆 Top 3 most visited
Est. APR
8.99-29.99%
Loan amount
$5K-$100K
Min. credit score
None
Best for Solar loans
Rate discount
Lightstream
🏆 Top 3 most visited
LightStream
Best for Solar loans
🏆 Top 3 most visited
Est. APR
6.99-25.49%
Loan amount
$5K-$100K
Min. credit score
660
Best for Solar loans
Rate discount
Best Egg
Best for Solar loans
Est. APR
8.99-35.99%
Loan amount
$2K-$50K
Min. credit score
600
Best for Solar loans
Secured loans
Wide range of loan amounts
Upgrade
🏆 Top 3 most visited
Upgrade
Best for Solar loans
🏆 Top 3 most visited
Est. APR
8.49-35.99%
Loan amount
$1K-$50K
Min. credit score
560
Best for Solar loans
Rate discount
LendingClub
Check Rate
on NerdWallet
on NerdWallet
Best for Solar loans
Est. APR
8.98-35.99%
Loan amount
$1K-$40K
Min. credit score
600
Best for Solar loans
Flexible payments
Navy Federal Credit Union Personal Loan
Best for Solar loans
Est. APR
7.49-18.00%
Loan amount
$250-$50K
Min. credit score
None
Best for Solar loans
Achieve Personal Loans
Best for Solar loans
Est. APR
8.99-35.99%
Loan amount
$5K-$50K
Min. credit score
620
Best for Solar loans
Rate discount

Our pick for

Solar loans

SoFi
Visit Lender
on SoFi's website
on SoFi's website
SoFi

SoFi Personal Loan

Est. APR

8.99-29.99%

Loan amount

$5,000-$100,000

Min. credit score

None

Lightstream

LightStream

Est. APR

6.99-25.49%

Loan amount

$5,000-$100,000

Min. credit score

660

BestEgg

Best Egg

Est. APR

8.99-35.99%

Loan amount

$2,000-$50,000

Min. credit score

600

Upgrade

Upgrade

Est. APR

8.49-35.99%

Loan amount

$1,000-$50,000

Min. credit score

560

Lending Club

LendingClub

Est. APR

8.98-35.99%

Loan amount

$1,000-$40,000

Min. credit score

600

Navy Federal Credit Union Personal Loan

Navy Federal Credit Union Personal Loan

Est. APR

7.49-18.00%

Loan amount

$250-$50,000

Min. credit score

None

Achieve

Achieve Personal Loans

Est. APR

8.99-35.99%

Loan amount

$5,000-$50,000

Min. credit score

620

What is a solar loan?

A solar loan is an unsecured personal loan that’s used to pay for solar panels and their installation. Banks, credit unions and online lenders provide solar loans. Typical loan amounts are $1,000 to $100,000, and annual percentage rates are 6% to 36%.

How do solar loans work?

Solar loans are installment loans. You receive money in a lump sum and repay it in equal monthly installments over a predetermined period, typically two to seven years.

Unlike with home equity financing, there’s no collateral on solar loans. This means your property isn’t at risk if you miss payments, but it also means interest rates can be high.

» MORE: What to know about solar panel financing

How to compare solar loans

Compare these features to find a low-cost loan that fits your budget:

  • Annual percentage rate: APR represents the total cost of a loan, including interest and any fees. The loan with the lowest APR is the least expensive.

  • Monthly payment: Affordable monthly payments are as important as getting a low rate. Be sure loan payments fit comfortably into your budget because missed or late payments can negatively affect your credit.

  • Fees: Some lenders charge an origination fee that’s typically 1% to 10% of the loan amount. The lender may take the fee before sending you the funds, thereby lowering the amount you receive.

  • Term: The loan’s repayment term helps determine the monthly payments. Loans with longer repayment terms have lower payments but cost more in total interest.

How to get a solar loan

  1. Get a cost estimate. Compare bids from multiple solar panel installation companies. This will tell you how much you need to borrow.

  2. Calculate solar loan payments. Use a solar loan calculator to determine what APR and repayment term will get you an affordable monthly payment.

  3. Check your rate. Many lenders offer pre-qualification, which lets applicants preview their potential loan rate, amount, monthly payment and repayment term. This requires only a soft credit pull, so you can review multiple offers before applying.

  4. 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.

  5. Get funded. If approved, expect to receive funds within a week.

Solar panel tax benefits

The federal government provides a 30% tax credit for those who purchase and install a solar panel system between 2022 and 2032. The credit will decrease to 26% in 2033 and 22% in 2034.

If you install solar panels in 2024, you could receive a $6,000 credit on a $20,000 system with the federal tax credit alone.

You can take advantage of tax benefits if you own your system, no matter how you pay for it.

Tax credits reduce your tax liability. If you get a $6,000 credit, you can reduce your tax bill by $6,000. This credit is nonrefundable, meaning if you don’t owe taxes — or owe less money than the 30% credit amounts to — you won’t get that money back in a refund. You can, however, carry any unused credit amount 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

Solar company 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 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.

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.

Cash-out refinance

A cash-out refinance is a second 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 2% to 6% of the mortgage’s cost. That means a $350,000 mortgage can cost $21,000 in closing costs — which is more expensive than some solar panel systems.

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.

Are solar panels a good investment?

Here’s how to determine whether solar panels are worth the investment:

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 2022, the average household used 889 kilowatt-hours each month, according to the latest data from the U.S. Energy Information Administration. In September 2023, residential customers paid an average of nearly 16.29 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 length of time it takes for your electric bill savings to match the cost of installing the system. This will be years, not months.

Let’s say 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 that determine your payback period include maintenance costs and whether utility rates change in your area.

Last updated on December 13, 2023

Methodology

NerdWallet’s review process evaluates and rates personal loan products from more than 35 technology companies and financial institutions. We collect over 50 data points from each lender 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.

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 Loans: Compare Solar Panel Financing Options

  • SoFi Personal Loan: Best for Solar loans
  • LightStream: Best for Solar loans
  • Best Egg: Best for Solar loans
  • Upgrade: Best for Solar loans
  • LendingClub: Best for Solar loans
  • Navy Federal Credit Union Personal Loan: Best for Solar loans
  • Achieve Personal Loans: Best for Solar loans

Frequently asked questions

  • The best solar panel financing option is the one with 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 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 loans are typically unsecured 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 two to seven years. Personal solar loans are one way to fund solar panels; other options include home equity, federal incentives or leasing if you aren't ready to buy.

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