Solar Loans Explained: Rates, Terms and Fees

Solar loans let you buy and own a solar system while paying for it over time, usually through financing arranged by the installer. To judge one, look past the advertised rate: solar loans often include a dealer fee added to the amount you borrow, a payment that can rise if you skip a planned lump-sum paydown, and sometimes a lien on the panels or your home.

Key takeaways

• The CFPB found solar loan terms typically run 8 to 25 years, with stated APRs typically from 1% to 7% (August 2024 report).
• Dealer fees typically add 10% to 30% of the cash price to the loan and can exceed 50%, according to the same report.
• Many loans re-amortize to a higher payment around month 19 unless you make a large prepayment.
• Secured solar loans usually have lower rates but use your home as collateral; unsecured loans usually cost more.
• Always compare the financed price with the cash price for the same system.

How solar loans work

With a solar loan, you own the system and a lender pays the installer. You then repay the lender in monthly installments. A NYSERDA homeowner guide notes the lender can be a bank, credit union, utility, state program or the solar company's finance partner, and that loans vary in payment, rate, term, credit requirements and security.

Because you own the system, you also take on the owner's responsibilities. The NYSERDA guide points out that loan borrowers bear the liabilities and are usually responsible for insurance. If you sell the home, you stay responsible for the loan unless a buyer formally takes it over.

Solar loan rates: why the APR can mislead

The annual percentage rate (APR) is supposed to capture interest plus finance charges, and EnergySage (updated October 2026) calls it the most important number on a loan. But the CFPB's August 2024 Issue Spotlight found that solar loan APRs often exclude the dealer fees that inflate the principal. A loan with a very low advertised rate can cost more in total than a higher-rate bank loan if a large fee was baked into the price.

The CFPB gives a simple example. A system with a $30,000 cash price plus a $9,000 fee becomes a loan with a $39,000 principal, and the loan documents show $39,000 plus interest. Nothing in the rate itself tells you that $9,000 of what you owe is a fee.

Line item	CFPB example amount	What it means for you
Cash price of the system	$30,000	What a cash buyer would pay
Dealer fee added	$9,000 (30%)	Paid to the lender, financed into your balance
Loan principal	$39,000	What you actually borrow and pay interest on

Source: CFPB Issue Spotlight: Solar Financing, August 2024. The CFPB's consumer advisory from the same month says sellers rarely show these fees and that they make the interest rate look artificially low. To spot one, ask every installer for its cash price in writing. Our explainer on dealer fees in solar loans goes deeper.

Solar loan terms and the re-amortization trap

The CFPB reports that solar loan terms typically run 8 to 25 years, though borrowers usually repay them in 7 to 9 years because of prepayments. EnergySage puts common terms at 10 to 20 years.

The prepayment piece is where many borrowers get caught. EnergySage says most unsecured solar loans are re-amortized: the lender expects a lump-sum payment, usually about a year in, and resets the payment afterward. The CFPB found that the required prepayment is often 30% of principal, and if you do not make it, many loans re-amortize at a higher monthly payment starting in month 19. One complaint the CFPB cited described a payment rising from $180 to $250 when the prepayment was not made.

That lump sum was designed around the federal tax credit. Per the IRS, the residential clean energy credit is not available for property placed in service after December 31, 2025. If a loan offered today still assumes a 30% paydown in month 18, ask what the payment will be if you never make it, and plan around that number. See solar loan re-amortization and lump-sum payments for examples.

Secured vs unsecured solar loans

EnergySage describes the trade-off this way:

• Secured loans usually have lower rates but use your home as collateral, so the lender can foreclose if you default. Most are fully amortized with fixed payments, and interest is sometimes tax-deductible.
• Unsecured loans usually have higher rates and need no collateral on the home, and they often come with same-day approval. Interest is not deductible.

"Unsecured" does not always mean nothing is filed. The CFPB notes some loans are secured by a lien on the panels themselves, and lenders commonly file UCC liens on solar equipment. Fannie Mae's Selling Guide (updated November 4, 2026) says that when a UCC fixture filing for financed panels is recorded, a future mortgage lender must count that debt and subordinate the filing if it is senior to the new mortgage. Ask before signing exactly what will be recorded, and where, and check with the lender or an attorney if anything in the security terms is unclear.

Fees and costs to find in the paperwork

Go through the loan agreement and truth-in-lending disclosure with this list:

• Amount financed vs cash price. Any gap is a fee or add-on.
• Origination or closing costs. EnergySage notes some solar loans have closing costs for administration and servicing.
• Payment schedule. Look for a payment change around months 13 to 19 and for any balloon payment.
• Rate type. Fixed or variable. EnergySage recommends fixed rates because variable rates can raise payments.
• Prepayment terms. Most solar loans allow early payoff without a penalty, but confirm it.
• Late fees and default terms. What happens if you miss a payment, and what the lender can do with the equipment.

How to compare solar loans from different lenders

You do not have to take the loan the installer offers. The CFPB's consumer advisory says that if a salesperson will not give you a straight answer on the cash price, you can get financing from a bank or credit union and bring that offer to the installer. The Oregon Department of Justice's 2026 consumer guide goes further and suggests comparing the total cost of the installer's loan with at least two other lending quotes.

To make the comparison fair, line up each offer on the same system and the same cash price, then compare:

1. The amount financed, including any fee.
2. The APR and whether it is fixed.
3. The total of all scheduled payments over the full term.
4. Any planned payment change or lump-sum expectation.
5. What gets recorded against your home or the equipment.

The lowest monthly payment is often not the lowest total cost, especially when a long term is paired with a large fee.

Red flags when you are offered solar loans

The CFPB and FTC describe several warning signs that show up at the kitchen table:

• The salesperson shows a loan amount with a projected tax credit already subtracted.
• You are told payments will stay the same, but the contract shows a change after 18 months.
• Loan documents are signed on a tablet while key pages are skipped. The CFPB cited complaints describing exactly that.
• No one will tell you the cash price or the APR.
• Savings projections rely on big future utility rate increases.

If a sale happens at your home, the FTC's Cooling-Off Rule generally lets you cancel covered sales until midnight of the third business day, and you must be given cancellation forms. If something goes wrong, the CFPB takes complaints online or at (855) 411-2372.

Next steps

Get the same system quoted at a cash price and a financed price, and get a loan offer from your own bank or credit union. Then check the numbers with our solar quote checker. If you are still deciding whether to own at all, compare loans with leases in solar lease vs buy.