About Solar Loans and Solar Debt

Let me preface this by saying that at our house, we avoid debt whenever possible. We believe that to remain as debt-free as possible is key to long term security. That said, if you own a home and wish to have power and do not have a power generation system of your own, one thing is for certain…. you will pay the utility company every single month for the rest of your life. My question here is, What is the difference between paying the utility company every month and making a payment on a solar system that you own… that will be paid off one day and will then be generating power that cost you $0.

Solar Loans

Solar loans are structured so that no upfront money is needed. With a decent credit score and other credit qualifications in the normal range, a homeowner can have a solar system installed and simply begin making payments on it instead of paying the electric company every month.

Is this debt? Yes it is. But if you didn’t go solar, you would still be paying, in most cases, very close to the same amount of money every month. So in the pure sense, a solar loan is debt, but if you look at it from the standpoint of monthly outlay to keep the household operating, it really isn’t.

Low Interest Solar Loans

You don’t have to be a credit rating rockstar to score a very good solar loan. If your credit variables are in the average to above average range, you will be fine. There are loans out there that I have seen that range from 3% down to 1.49% interest rates.

Paying Cash for Solar

If you have lots of cash laying around, perhaps this isn’t a bad idea. But if you could put the money your solar system will cost in a Money Market account at your local bank, chances are you can get more than a 1.49% return on that money. If you can get a solar loan, then put your pile of cash to work and you can probably find a way to get a large enough return on it to cover your payment 😉
That would be the model of efficiency.

Some folks have credit problems or other reasons not to finance anything. No judgement here. I as mention in other parts of this site, people have many different needs and uses for both money and credit. In the end, how you pay for your solar system isn’t as important as the fact that you ARE GETTING a solar system and will soon be generating your own clean energy for your household.