What are my solar financing options?

Solar is a smart investment, which you probably already know. But you may be wondering how best to finance your solar system. A typical system will cost between $15,000 and $25,000. At A.M. Sun Solar, we excel in coming up with solar financing solutions that make sense for all of our clients. Each of our financing options prioritize one thing in particular: How can we start saving you money right away?

When it comes to getting solar, you can buy, lease, or purchase power from a system. Each method has its benefits and will vary depending on equipment, location of your solar array, the size of your electric bill, and much more. Keep reading for more details about the different solar financing solutions available to you with A.M. Sun Solar.

Now is the time to go solar

Whichever financing solution you choose, we recommend installing your system as soon as possible for two reasons:

  • Solar Investment Tax Credit rates are set to expire by 2023 for new residential solar systems unless Congress votes to renew them. Owners of new commercial solar will still receive a small deduction on their taxes through 2024.
  • Net Energy Metering (NEM) 3.0 could decrease the energy credit paid to solar owners and include additional monthly fees on your electric bills. Based on the current framework, NEM 3.0 would go into effect on May 27, 2022. That means people who are interested in installing home solar systems under current rates have a limited amount of time to do it. The silver lining of this situation is that people who installed their solar systems under NEM 1.0 or NEM 2.0 will be grandfathered in without having to pay any fees.

Buying Solar with Cash

When paying with cash, you can expect:

  • A high return on investment
  • A quick payback period
  • Increased value of your property without increasing your property taxes
  • A federal tax credit (*check with your financial advisor)
  • Costs far less than what you would pay for electricity over the lifetime of the system

If you have the money to invest in your solar system and reap the benefits of the federal tax credit, we recommend paying cash for your system. If paying with cash isn’t an option for you, we recommend getting a loan.

Paying for Solar with Loan

When paying for your solar energy system with a loan, you can expect:

  • No money out of pocket
  • Typically you’ll have instant savings—paying less than your utility bill
  • No prepayment penalty. Pay off your loan any time!
  • High rate of return once the system is paid in full
  • Receive a 26% federal tax credit through 2022. Check with your financial adviser.
  • Re-amortize your loan using the federal tax credit to further reduce your monthly payment

Many times, you can secure a loan that is lower than your monthly utility expenses. No need for you to worry about all the options—our experts will help you choose the right loan for you. We have a variety of loans from many different sources.

Paying for Solar with a Solar Energy PPA/Lease

PPA Stands for Power Purchase Agreement. Here’s what to expect when purchasing with a PPA/Lease:

  • $0 out-of-pocket expense
  • Pay less for your power
  • No longer worry about the rising cost of electricity
  • System is warrantied, maintained, monitored, and insured at no expense to you

When you choose a PPA/lease you will be purchasing power produced by solar equipment that is owned by a third party and has been installed on your roof, or elsewhere on your property. You will still be dependent on PG&E, but you will be buying your power at a lesser rate by going solar. Since you won’t own the equipment, it will be warrantied, maintained, monitored, and insured by a third party. In addition, the production of the system will be guaranteed for the term of the agreement, which is typically 20 years. This means you don’t need to worry about anything, including the ever-increasing cost of electricity!

Paying for Solar with a PACE Loan

PACE stands for Property Assessed Clean Energy. This means you can get a solar loan regardless of your credit score and regardless of your debt to income ratio. 

Here’s what to expect when paying for solar through a PACE Loan:

  • $0 out-of-pocket expense
  • Easiest solar loan to qualify for
  • Payment becomes part of your property tax bill
  • No prepayment penalties
  • Re-amortize your loan as often as you like with as little as $2,500 each time
  • Up to 30-year terms
  • Most PACE loans are cash-flow positive
  • Receive the 26% federal tax credit until 2022 and either keep it, or re-amortize your loan in order to reduce your monthly payments
  • Deduct the interest on the loan for an even greater savings

You’ll need equity in your home and you’ll need to be current on your property taxes to qualify for a PACE Loan, but otherwise, the stipulations are fairly lenient. The beauty of this loan is when it comes time to sell your home, the solar and the loan stay with the house.

Ready to get started?

Now that you are aware of your options for financing your solar energy system, the next step is to decide which option is right for you. That’s where we come in — as your local solar experts, A.M. Sun Solar strives to find a plan that works for you. Connect with us today to get started!

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