Third-party solar leasing has become very popular over the past three years. Most of the national solar companies rely heavily on 20-year contracts such as solar leases or Power Purchase Agreements (PPAs). These finance contracts are fairly simple to understand and easy for these companies to sell to customers who don’t know about better, less costly alternatives. If a homeowner is not able to take advantage of the 30% federal income tax credit for solar, a lease or PPA may be beneficial, but that’s about the only time this is true. In most cases, it is wise for solar customers to consider an alternative solar financing method.
At Stellar Solar, we believe that owning a solar system is better for most people than leasing one. So, we offer a financing called a “combo loan,” which (like the lease) requires no money down, but also allows you to take advantage of the federal tax credit; it’s called that because it’s really two loans in one.
- First, your solar income tax credit (30% of the total price) is financed for 12-18 months at 0% interest, allowing you time to collect your tax credit from the IRS and then pay off this loan in full.
- Next, the remainder of your solar energy investment (70%) is financed through a separate loan which extends for 12 years at 1.99% — with a fixed payment amount that is much less than your payments to SDG&E now. Even better, there are no pre-payment penalties, so this loan can be paid off at any time. Most leases lock you in for 20 years of payments; the only exception is if you actually sell your home.
With this combo loan, you own your solar panels in 12 years rather than leasing them for 20 years. There are no liens on your property (as with a lease), so you won’t have any hassles if you decide to sell your home. With a lease, there are no guarantees that the next owner will want to take over your payments, but who wouldn’t want to own free-and-clear a solar energy system that drastically reduces or even eliminates their electric bill?
One seeming benefit of a lease is that the leasing company guarantees the solar equipment during the lease. We agree that long-term protection against system problems is important, so we have contracted with American solar equipment providers that protect customers with a 25-year equipment warranty.
As the company voted the “Best Solar Panel Company in San Diego” by U-T readers for the past 3 out of 4 years, we believe this is the best solar financing program available, but you can be the judge. Give me a call and I would be happy to put a custom solar proposal together for you.