Quick answer
Solar Loan A solar loan is money borrowed to buy a solar energy system that you then own, repaid in monthly installments with interest. Most are arranged by the installer at the point of sale through a specialist lender, often with a dealer fee built into the amount borrowed.
Because you own the system, you keep any state incentive and the savings; but the loan's real cost depends on the principal, not just the advertised APR or monthly payment.
Quick facts
The key facts about solar loan, with sources:
- Who owns the panels
- You (unlike a lease or PPA)
- Typical dealer fee
- 10–30% of the cash price, sometimes over 50% (CFPB) 1
- Common structure
- Payment re-amortizes around month 19 unless a lump sum is prepaid 1
- Security
- Often a UCC fixture filing on the panels 1
- Federal homeowner credit (25D)
- Not available for property placed in service after 31 Dec 2025 3
Key takeaways
- A solar loan lets you own the system and pay over time.
- The amount financed can include a hidden dealer fee of 10% to 30% or more of the cash price.
- Compare the cash price and the total of all payments, not only the APR.
- Many loans raise the payment around month 19 unless you pay down a lump sum.
- The federal 25D homeowner credit ended for systems placed in service after 31 December 2025.
- You often have three business days to cancel a home sale in writing.
What a solar loan is, in plain words
A solar loan is borrowed money used to buy a solar system. You own the panels from day one. You pay the lender back each month, with interest.
Most solar loans are offered by the installer at the kitchen table. The installer works with a lender that focuses on solar. That makes signing quick, but it also hides some costs in the loan amount.
Owning matters. As owner, you keep the savings and any state credit you qualify for. With a lease or PPA, the company owns the system and those benefits go to it.
How the money moves
- Installer quotes a cash price and a loan offer
- Lender pays the installer, minus any dealer fee it keeps
- You owe the full amount financed, often cash price + dealer fee
- You pay monthly; the lender may file a UCC-1 on the panels
- If you do not prepay a set amount, the payment may reset around month 19
Types of loans people use for solar
| Loan type | Secured by | What to watch |
|---|---|---|
| Solar-specific loan (point of sale) | Often a UCC-1 filing on the panels | Dealer fees and a month-19 payment reset 1 |
| Home equity loan or line (HELOC) | Your house | Your home is at risk if you cannot pay |
| Unsecured personal loan | Nothing | Higher rates; shorter terms |
| Credit union green or energy loan | Varies | Ask whether fees are added |
| Cash-out refinance | Your house | Resets your mortgage; closing costs |
The dealer fee: the cost you do not see
A dealer fee is a charge the installer pays the lender so it can offer a particular rate, especially a low "promotional" APR. The installer recovers it by raising the price you finance.
The Consumer Financial Protection Bureau found these fees typically run 10% to 30% of the cash price and can exceed 50%, and that lenders often roll them into the principal without showing them as a markup.
The CFPB's own illustration: a system with a $30,000 cash price, a $9,000 hidden fee, and a $39,000 loan. The APR on that loan can look low because the interest has been moved into the principal.
The fix is simple to ask for: get the cash price in writing, then compare it with the amount financed. The difference is the fee.
Sources: [1]
APR, payment or total cost: which number to compare
| What a quote shows | What it hides | Better question |
|---|---|---|
| A low APR | A dealer fee inflating the principal | What is the cash price, and what is the amount financed? |
| A low monthly payment | A long term or a balloon/re-amortization | What is the total of all payments? |
| "Net system cost" after a tax credit | That the credit may not exist or may not be usable | What do I owe if I receive no federal credit? |
| Payment below my current bill | Payment and savings change on different schedules | What happens to the payment in month 19? |
Example: the CFPB's dealer-fee case, step by step
These are the CFPB's own illustration figures 1. They show how a low APR can still cost more.
| Line | Amount | What it means |
|---|---|---|
| Cash price of the system | $30,000 | What you would pay with no loan |
| Dealer fee | $9,000 | 30% of the cash price, added to the loan |
| Amount financed | $39,000 | What you actually owe |
A loan of $39,000 at a "low" rate can cost more in total than a $30,000 loan at a higher rate. Ask for both prices in writing, then use the dealer fee calculator to see the gap.
Where to find the key numbers in your paperwork
- The Truth in Lending disclosure box: APR, finance charge, amount financed and total of payments.
- The installation contract: the cash price, if they list it.
- The payment schedule: look for a step-up around month 18 or 19.
- The security section: whether a UCC-1 or a mortgage will be filed.
- The notice of cancellation: how many days you have and where to send it.
Benefits and drawbacks of a solar loan
What it does well
- You own the system and keep long-run savings.
- You keep any state credit, such as South Carolina's 25% credit, if you qualify.
- Little or no cash needed up front.
- Owning can be simpler than a lease when you sell, once the loan is paid.
Where it falls short
- Dealer fees can raise the real price by thousands.
- Payment may jump if you skip a planned lump-sum paydown.
- A lien or UCC-1 can slow a sale or refinance.
- You carry repair risk after warranties end.
The month-19 payment jump
Many solar-specific loans assume you will pay down about 30% of the principal, matching the old federal tax credit, around month 18. If you do not, the CFPB found, the loan re-amortizes at month 19 and the monthly payment rises sharply. Borrowers told the CFPB they had not been told about it.
That structure is riskier now: the IRS says the §25D homeowner credit is not available for property placed in service after 31 December 2025. A loan sized around a credit you cannot claim leaves you to find that prepayment yourself or accept the higher payment.
Warning signs before you sign
The CFPB documented each of these in its 2024 report 1.
- A "net cost" in big print that subtracts a tax credit, with the real loan amount in small print.
- A seller who will not give a cash price.
- Claims that solar will wipe out your electric bill.
- Signing on a tablet with no time to read the documents.
- Pressure aimed at older owners. The CFPB found 44% of older solar buyers financed, against 36% of younger ones.
How to shop for and sign a solar loan
- Get the cash price and the amount financed on the same page.
- Ask for the dealer fee in dollars. If they will not say, get a quote from a credit union or home-equity lender.
- Find the re-amortization or prepayment clause, and the payment if you make no lump sum.
- Check whether a UCC-1 or other lien will be filed, and against what.
- Remove any federal tax credit from the "net cost". For homeowners there is no 25D credit for 2026 installs.
- Read the cancellation notice. Keep your copy and the cancellation form.
- Sign only when you have read every page.
Living with the loan: UCC-1 filings and selling your home
Lenders commonly secure a solar loan with a Uniform Commercial Code fixture filing (a UCC-1) recorded against the panels. The CFPB notes these filings can muddy the title in some jurisdictions 1.
When you sell or refinance, the buyer's lender or title company may require the filing to be paid off or released first.
Our guide to solar UCC-1 liens covers how to get one released, and selling a home with a solar loan covers the transfer options.
The rules that protect you
The FTC's Cooling-Off Rule gives you three days to cancel many sales made at your home.
Your right lasts until midnight of the third business day after the sale; Saturday counts, Sunday and federal holidays do not. The seller must give you two copies of a cancellation form. Send your notice by certified mail and keep proof.
Lenders must give a Truth in Lending disclosure showing the APR, finance charge and total of payments. The CFPB oversees these rules and has warned about how solar loans present them.
Tax: the IRS says the §25D homeowner credit is not available for property placed in service after 31 December 2025. Any loan built around it is built around money you will not get. This is not tax advice.
Solar loan vs other ways to pay
| Option | Who owns it | Who keeps state incentives | Typical catch |
|---|---|---|---|
| Cash | You | You | Large upfront cost |
| Solar loan | You | You | Dealer fees; payment reset |
| Lease | The company | The company | Escalators; transfer when selling |
| PPA | The company | The company | You buy power per kWh; escalators |
Common misunderstandings
- Myth The lowest APR is the cheapest loan.
- Reality A low APR can come with a large dealer fee in the principal. Compare the total of payments.
- Myth My payment will always be below my old bill.
- Reality Payments can jump at month 19, and savings change with rates and weather.
- Myth A UCC-1 is a mortgage on my house.
- Reality It is a filing on the panels, but it can still show up when you sell or refinance.
- Myth The tax credit will cover my lump sum.
- Reality For 2026 homeowner installs, there is no federal 25D credit.
In South Carolina, Georgia and Virginia
In South Carolina, a home solicitation sale can be cancelled until midnight of the third business day after signing, by written notice (SC Code §37-2-502) 4.
Solar sellers must also follow the state's consumer-protection law; the Office of Regulatory Staff can fine up to $2,500 per violation and void the agreement (SC Code §58-27-2660) 5.
The 25% state tax credit goes to the owner, so a loan keeps it with you, unlike a lease.
In Georgia and Virginia, the federal FTC rule applies; check your state attorney general for any extra rights.
When a solar loan makes sense, and what to do next
A loan can make sense if you plan to stay, want to own the system, and can get a fair price with low or no dealer fee. Run payback on the full financed cost, not the cash price.
If you may sell soon, plan how the loan will be paid off at closing. If the deal depends on a tax credit, walk away or rework it.
Next step: get two quotes with cash prices, then run each through the tools below.
Calculators and guides
- Solar loan calculatorPayment and total cost at any APR and term
- Contract red-flag checker
- Solar financing: cash, loan, lease and PPA
- What "zero down" solar really costs
- Door-to-door solar sales
Questions about solar loan
What is a dealer fee on a solar loan?
It is a fee the installer pays the lender to offer a given rate, recovered by raising the financed price.
The CFPB found such fees typically equal 10% to 30% of the cash price and sometimes more than 50%.
Ask for the cash price in writing; the gap between it and the amount financed is the fee.
Is a solar loan a lien on my house?
Usually not directly, but it can still affect a sale. Many solar loans are secured by a UCC-1 fixture filing on the panels rather than a mortgage on the house. That filing can surface in a title search when you sell or refinance. A home-equity loan, by contrast, is secured by the house itself.
Why did my solar loan payment go up?
Most likely the loan re-amortized because a lump-sum paydown was not made. Many solar loans expect you to prepay a set share, often sized to the old federal tax credit, around month 18. If you do not, the payment rises from month 19. Check your loan agreement for the amount and date.
Is a solar loan better than a lease?
It depends on your goals. With a loan you own the system and keep state incentives and long-run savings. With a lease the company owns it and you pay for its use, often with yearly increases. Compare total cost over the same period on our lease-vs-buy tool.
Can I still get the 30% federal tax credit with a solar loan?
Not as a homeowner for a system placed in service after 31 December 2025. The IRS says §25D is not available for that property, however the system is paid for. Leases and PPAs are a separate case; ask a tax professional.
Can I cancel a solar loan after signing?
Often yes, within a short window. The FTC's Cooling-Off Rule gives three business days to cancel many sales made at your home, and South Carolina law sets a similar deadline. Cancel in writing and keep proof of mailing. Check your contract's cancellation notice for the exact terms.
What credit score do I need for a solar loan?
It varies by lender, and we have no single sourced cut-off. Lenders set their own score and income rules. A lower score usually means a higher rate or a larger dealer fee. Compare at least one offer from outside the installer, such as a credit union.
Can I pay off a solar loan early?
Usually yes, and many are designed for an early lump-sum paydown. Read the prepayment terms for any penalty. Paying early cuts interest, but it does not refund a dealer fee already built into the principal.
What happens to my solar loan if I sell my house?
Most owners pay it off at closing, or the buyer takes it over if the lender allows. The lender may need to release a UCC-1 filing before the sale closes. Start early, because releases can take time.
Sources
- Consumer Financial Protection Bureau, Issue Spotlight: Solar Financing (August 2024), retrieved .
- Federal Trade Commission, Buyer's remorse: the FTC's Cooling-Off Rule may help, retrieved .
- IRS, Residential Clean Energy Credit (§25D), retrieved .
- South Carolina Code §37-2-502 (home solicitation sales), retrieved .
- South Carolina Code Title 58 Ch. 27 (§58-27-2660 consumer protection), retrieved .
Expert review
Written by the HyreSolar Research team. Not yet reviewed by an outside expert. We say so rather than imply a review that has not happened; see our editorial policy.
How the numbers were checked: Dealer-fee ranges, the re-amortization structure, the UCC point and the $30,000 illustration are the CFPB's own findings (report reloaded 8 October 2026).
Cancellation timing is from the FTC Cooling-Off Rule page. SC cancellation and consumer-protection rules are from the HyreSolar SC fact pack (state code, retrieved 5 October 2026). Not financial, legal or tax advice.
Suggest a correction. We fix errors and say what changed.