Did you miss CEO Marty Morud in a recent Star Tribune article about solar financing? If so, you can catch up here. Unfortunately, there are a few national solar installation companies that promise Minnesota homeowners cheap interest rates on their solar projects. However, these low rates often come at a cost. So, how can you avoid getting fleeced by Big Solar and still get a good price on a solar energy system that will power your home for years?
Buyer Beware
A recent investigation by the Minnesota attorney general’s office found that several of the big, multi-state solar energy installers operating in Minnesota entice homeowners with low interest rates loans, only to charge those owners a hefty dealer’s fee for offering the financing through their lender partners.
While the companies claim this is legal, the state is suing the companies for allegedly concealing and improperly charging homeowners dealer’s fees that can add north of $10,000 to a solar energy system project’s cost. The dealer’s fee effectively increases the cost of the project by 10 to 30 percent, according to the attorney general’s lawsuit.
Predatory lending in the solar industry isn’t exclusively a Minnesota problem. Earlier this year, the federal Consumer Financial Protection Bureau issued an advisory on the solar lending industry, saying some companies are misleading property owners about their eligibility for federal incentives or luring them into projects with low interest rate loans that inflate the total cost of the project.
Finding a Reputable Solar Installer
To be frank, news like this really upsets us. As a local, reputable company serving property owners in Minnesota, it is frustrating to see out-of-state firms take advantage of our neighbors.
At TruNorth Solar, we firmly believe you should know the price of your solar energy project up front, and that your decision to finance or pay cash for your project should not change the price. As our CEO Marty said in the Star Tribune article, “it should be the same price, whether you’re financing something or you’re paying cash.”
The Bottom Line on Solar Financing with TruNorth Solar
At TruNorth Solar, we don’t pair with lenders who use dealer fees. Instead, we often refer property owners to the Center for Energy and Environment (CEE), a nonprofit that offers loans for solar energy projects. These loans offer the lowest interest rates without a dealer fee by a long shot.
Our website offers property owners information on the different ways to purchase their solar energy systems. For example, here’s a closer look at the four options for residential solar financing.
Cash
Paying for your solar system upfront with cash means you start saving on your electricity bills right away, and you won’t pay monthly loan payments. Paying with cash maximizes your return on investment on your system. You’ll also take full advantage of federal and state tax incentives. Keep in mind that the average solar energy system costs $30,000, which is a significant amount of cash that may not be feasible for everyone.
Solar Financing Loans
Solar loans offer homeowners no upfront costs, spreading the cost of the system out over time. You still own the system and can benefit from tax incentives. Interest rates and loan terms vary by lender, so you will have the opportunity to find the loan that works best for you. Remember that depending on the loan, you may end up paying more over time due to interest, and your eligibility may depend on the strength of your credit score.
Home Equity Loans or Lines of Credit
Homeowners may choose to finance their solar project with a home equity loan or line of credit. These loans are offered through your bank or credit union and often have lower interest rates than personal loans do because they are secured by your home. Interest on a home equity loan may be tax deductible. Keep in mind that your home is the collateral on your home equity loan, so if you fail to make payments, the bank could foreclose on your home. Your eligibility for a home equity loan or line of credit may depend on the strength of your credit score.
PACE Financing
PACE (property assessed clean energy) financing may also be available. PACE financing does not require a credit check, as your property value determines your eligibility. If approved, you repay PACE financing through your property tax bill. The loan can be passed to your home’s new owners if you sell your home. PACE financing often has higher interest rates compared to other loans, and not all areas offer this option.
Our team has deep expertise in all of these options as well as solar financing for commercial properties, agricultural properties, and solar leasing. We feel that it is our responsibility to educate our customers on their options so they can decide how to best purchase their solar energy system.
Want to work with a reputable, local Minnesota solar installer? Get in touch with the experts at TruNorth Solar today for a free estimate on your home’s solar energy system.
