You may finance and save, but cash deals are best and this is why…
Cash deals for solar can be better than solar financing for a few reasons. One significant advantage of paying cash for a solar panel system is that it eliminates the interest and fees associated with financing. When you pay cash for your solar panel system, you avoid interest charges, which can save you thousands of dollars over the life of your system.
Important Facts About Financing
Banks do not recognize solar as an asset. That alone creates complications in the financing process. How are banks able to secure their loans without something to back it? That’s why most traditional banking institutions will not offer extended financing and will generally require the buyer to take out a personal loan with a maximum term of 6-years.
Solar Banks
Solar banks to the rescue… Well, hold your seat. Yes, solar banks provide a niche market for extended loans up to 25-years. In order to secure their asset they consider the length and terms to determine a loan fee (and it’s not cheap). Solar banks often charge in the range 0f 15-30% dependent on the loan terms and that is an upfront cost added to the principle of the loan. That’s right, you are not only adding 15-30% to the top of the loan, but you are also paying interest on the entire loan.
One of the leading motivators for going solar is the Federal and State incentives. Solar loans basically absorb that benefit… sounds like a scam right? I would not go as far as calling it a scam, but it is toeing the boundary of what some may consider unethical. Ultimately, they are offering a service and are in control of the terms.
Are Loans Worth It?
After all is said and done, solar loans are still beneficial. Cash deals certainly offer the most savings, but not everyone has $10K-$40K available depending on the size of the project to pay the upfront costs. In those cases, a loan might be the only option. While the savings are less because of the associated fees, the savings on electricity are still a win for those making the switch.
Other Cash Benefits
With a cash purchase, you own the solar panel system outright. This means that you are not tied to a long-term financing agreement or lease, and you are free to do what you wish with the solar panel system, including selling it or relocating it to another property.
Furthermore, cash deals often come with incentives such as discounts or rebates, which can make the overall cost of the system more affordable. These incentives are often not available when financing a solar panel system, and they can significantly reduce the upfront cost of the solar panel installation.
Another advantage of paying cash for a solar panel system is that you can often negotiate a lower price with the solar panel installation company. Solar panel installation companies may offer discounts or price reductions for customers who pay in cash because they do not have to deal with the administrative and financial overhead associated with financing.
In summary, cash deals for solar panel systems can be advantageous in terms of saving money on interest and fees, owning the system outright, negotiating lower prices, and taking advantage of incentives. However, paying cash may not be feasible for all homeowners, and financing options may provide more flexibility and access to tax incentives and rebates. Ultimately, the decision to pay cash or finance a solar panel system depends on your individual financial situation and goals.