Zero Down Solar: The Real Deal

Recently we added one of our customers electric bills featuring a $0.00 balance due on our Facebook page. This isn’t unusual for our customers, certainly during the spring, summer, and fall months. We got quite a lot of confusion regarding cost from our fans. They had some questions about Facebook ads they had been seeing. So, we wanted to take some time to address some of the concerns that we’ve heard.

The Truth About $0 Down Solar

A $0 down solar loan is a real thing, but it doesn’t mean that the solar system is free.

A zero down loan allows homeowners to finance the full cost of the solar system without making a down payment. While there isn’t an initial out of pocket cost, obviously there will be monthly payments on the loan. Just like a car loan, if you choose a $0 down loan, your monthly payments will be higher than if you put some money down upfront. As with any loan, the amount of interest paid goes up based on the amount you borrow and the length of the loan.  All of our clients are different, and some are ready to pay for their solar upfront and some choose to finance all or part of the system.

We can help you choose the option that best works for you: cash purchase, conventional financing, or a special solar loan.  Conventional financing (typically a home equity line of credit or refinancing your mortgage+ solar together) is the absolute best source of financing.  This option often has the lowest rates and the added bonus of tax-deductible interest (consult your tax advisor to make sure this works for your personal circumstances). We also work with specialized solar loan providers such as the Clean Energy Credit Union and Mosaic.  These lenders use just the solar equipment as collateral and do not secure the loan with your home equity.  They are typically faster and easier to work with.

If you’re interested in learning more about loan offerings, just let us know! Learn more from Solar Consultant David Zelasko. In this video, he explains the different types of solar loans, what makes solar loans different, and various partners we work with.

Three factors determine the rate you get on your solar loan:

  1. Your Credit Score – as with any borrowing, the lender assesses risk based on your credit history.
  2. Loan Term – the longer your term the lower your monthly payment. You’ll find this is the same as most loans.
  3. Solar Contractor – this isn’t because certain solar installers get better rates. Solar installation companies typically “buy down” the interest rate by paying more to the financing company to be able to offer that rate. That cost comes back on the customer in the form of a higher project cost.

But What about “No Cost Solar” and “New Special Programs”?

You may have seen some advertisements on Facebook advertising “free solar” or “No Cost Solar”. Sound too good to be true? Yeah, it is.

Some other solar companies misleadingly use the word “free” but what they’re actually referring to is a long-term low-interest loan. Often they offer what appears to be a very low-interest rate, but they secretly add 15 – 25% to the cost of the system to buy down the rate from their loan partner. It’s important not to assume that a lower rate is a better deal, as the full turnkey cost of the system is likely to be higher plus the lifetime cost of interest payments. We believe that these advertising tactics are misleading and bad for solar buyers. We promise to work with our clients and provide accurate information so they can choose to harness the clean energy of the sun based on what works for them.

No Statewide Program

Many of these same solar companies and advertisements imply that $0 down solar is a statewide program or some special grant or subsidy. Again, this misleading advertising is purposefully deceptive and not the way we choose to do business. Loan options vary from solar company to solar company. The various finance partners have different programs and different rates (and different hidden fees baked into the price). Most solar installers in Ohio offer $0 down loans. Like them, we can offer you zero money down with any of our term loans – often a great option for those that want to go solar but don’t want to tap into home equity or savings.

‘Predatory and harmful’: Misleading solar ads touting 100% free panels and fake stimulus programs spread on Facebook as the coronavirus upends door-to-door sales

Check out this article by Business Insider for more specifics on misleading advertisements in the solar industry. 

Choose a solar partner with integrity who you can trust. For a checklist of tips we recommend when choosing your solar installation partner, check out this How To Choose a Solar Installer webinar recording. 

 

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