Question 1

How does a solar loan work?

Accepted Answer

You borrow the cost of the system and repay it in fixed monthly installments over a set term: typically 10 to 25 years. The panels are usually the collateral. Many solar loans are sold on the idea that the monthly payment is lower than the power bill the system replaces, so it can be cash-flow positive from the start. This calculator tests exactly that by comparing your payment to the bill it offsets.

Question 2

What is a solar loan dealer fee?

Accepted Answer

It's a markup the lender adds to the system's cash price in exchange for a low or 0% advertised APR. Fees of roughly 10–30% are common, so a $25,000 system might be financed as $28,750 or more. Because the fee is baked into the price rather than the rate, a 'low APR' loan can actually cost more than a higher-APR loan with no fee. Always ask for the cash price and the financed price: the gap is the fee.

Question 3

Is it better to finance solar or pay cash?

Accepted Answer

Paying cash avoids both the interest and the dealer fee, so it's the cheapest total cost: the 'premium over cash' line shows what financing adds. But financing lets you keep your cash and can still be cash-flow positive if the payment is below your old bill. Compare the total amount paid and the premium over cash, not just the monthly payment or the headline rate.

Question 4

Is this a financing offer or quote?

Accepted Answer

No. It's an evergreen estimate from numbers you enter, not a lender quote, and it doesn't include taxes, insurance, or any incentives you might qualify for (enter your price net of those). Use it to compare loan structures and to sanity-check a solar sales pitch, then confirm terms with the lender. For whether solar pays off at all, use our solar payback calculator.

Solar Loan Calculator

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