Explore the Possibilities of Solar Panel Financing

D.P. Taylor
Written by D.P. Taylor
Updated May 12, 2022
A house with solar panels during spring time
Photo: querbeet / iStock / Getty Images Plus / Getty Images


  • Paying upfront for solar panel installation isn’t always feasible due to the price point. 

  • Solar financing options include leases and loans. 

  • Some solar loans are available for no money down.

  • You typically need a credit score of 640 to get a solar loan.

  • It's also possible to finance a solar battery.

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Solar panels are very popular with homeowners these days, and it’s no wonder why. It’s a renewable energy source that can lower your electric bill and add value to your home. However, there is one thing that is keeping homeowners from buying solar panels en masse: sticker shock.

Solar panel systems can have high upfront installation costs, but don’t despair—there are financing options for homeowners. This guide breaks down some of the top financing options and discusses which one might be right for you.

What Is a Solar Panel Loan?

A solar panel loan works the same as any other loan. You borrow enough money to purchase the solar panels and then pay back that loan over the course of several years. Also, these loans are often available for zero money down.

You have a choice between a secured solar loan and an unsecured loan. In the former case, the loan is tied to your home. This results in better rates, poses more risk to your home. An unsecured loan still uses collateral, but only the solar panels themselves.

Does a Solar Loan Affect Credit Score?

Yes, just like any loan, a solar panel loan will impact your credit score. That impact can be positive if you have a strong track record of making payments on the loan, or it can be negative if you miss payments or default on it.

What Credit Score Do I Need to Get a Personal Loan for Solar Panels?

Generally, you need a credit score of at least 640 to get a loan for solar panels. Lenders may be more lenient if you are able to put up significant collateral, such as your home. But to personally finance it, this is the credit score you'll want to have to maximize your chances of getting it.

What Is a Solar Lease?

You can finance a solar system by entering into a Solar Power Purchase Agreement (PPA) or a solar lease, meaning you won't have to pay the up-front costs of buying solar panels and having them installed. Instead, you'd pay a monthly fee for the electricity that the solar panels produce.

Sounds doable, right? But before you call a solar installation pro to get the project going, let’s answer some basic questions about cost and which of these three options might be best for you.

How Much Does Solar Panel Installation Cost?

A worker installing a solar panel on the roof of a house
Photo: adamkaz / E+ / Getty Images

The cost of typical home solar panel installation is $17,000 to $32,000. Many homeowners don’t have the funds to pay upfront, which is why they explore financing options. 

How Much Does Solar Panel Monthly Financing Cost?

To finance solar panels, expect to pay between $75 and $200 per month, depending on how large of a solar panel system you choose to get, and the length of your term. 

Cash vs. Loan vs. Lease Comparison for Solar

So which option is right for you? It depends on your situation.

Cash: If you can afford it, cash is the best option as you'll save money by not having to pay interest while still enjoying the significant financial benefits of owning solar panels, like lower energy costs and a large federal tax credit of up to 30% of the total system cost (not to mention solar panels boost home value). Not many people have that much cash lying around, however, so it's understandable if you still want to get financing.

Solar Lease/PPA: A solar lease or a PPA is perfect for homeowners who would like to enjoy the benefits of solar energy but don't want to outright buy a solar panel system. In this case, it's essentially third-party ownership: the owner installs the solar panels on your property and then sells you the electricity they produce. Before the installation happens, you will enter into an agreement with a provider that will lock in a rate for a predetermined amount of time, like 25 years. Unfortunately, by doing it this way, you won't benefit from the generous federal tax credits, financial incentives, and rebates since you're not the owner of the system.

Loan: A loan is the best option for homeowners who want to get the benefits of the significant federal tax credit and other incentives but don't want to spend that much money up front on the solar panel system.

Can You Finance a Solar Battery Installation?

According to HomeAdvisor, the cost of installing a solar battery storage system can be anywhere between $300 and more than $15,000, with an average of around $6,000. As a result, many homeowners often ask if they can finance those as well. Talk to your solar loan provider about including the cost of a solar storage battery, as they often will cover that in the original solar loan. Also, look into incentives and rebates to help bring down the price, and keep in mind the federal solar tax credit includes battery systems.

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