Switching to solar energy has many benefits to organizations and homeowners alike. While fossil fuels are expensive and their costs are unpredictable in the long run, solar energy is free and abundant and only require a simple solar panel installation. Previously, the cost of going solar was prohibitive and payment options were limited. However, solar companies and solar financing institutions have come up with innovative payment systems to take care of different financial situations. In addition to that, when buying a solar system, federal tax credit and state incentives make the system even more affordable.
How Does Zero Down Solar Work?
With a zero down solar purchase, you do not pay any upfront payments. You finance your solar lease or solar loan with monthly installments only. The zero-down solar financing makes it possible for homeowners to reap the benefits of solar energy while using a convenient payment system. ,
Zero Down Solar Financing Options
There are two main solar financing options and both of them have a zero-down solar option; namely solar lease and solar loan. In this case, it is advisable to first consider whether you will take a solar lease or a solar loan. If you are paying cash for your solar system, then you do not need a zero down solar financing option.
Zero Down Solar Loan
A zero down solar loan means that you will not pay any upfront costs on your solar loan before the solar system is installed. When considering a solar loan payment option, your solar company will connect you to a lender to finance your solar system. On the other hand, if you are a DIY enthusiast, you can approach your bank or any financial institution for a solar loan. You will sign an agreement to pay back your solar loan through monthly installments with interest to the financing institution.
The difference between solar loans and solar leases is that with solar loans, you are buying the solar system and as such, you own the solar system. With solar leases, the solar system belongs to the solar company. Owning a solar system comes with the added advantage of benefiting from the federal tax credit and state incentives. You can also save more. Worth noting, the subsidies expire soon.
Zero Down Solar Lease
Whereas some solar leasing options require a down payment, others are zero down solar leases with no upfront costs. A solar lease has its advantages over owning a solar system. First, it is hassle-free. The solar company takes care of all the details of installing the solar system. The leasing company also maintains the panels for the duration period of the lease. However, in a solar lease, you will not own the system. As such, it is the solar leasing company that will claim for solar federal tax credit and state incentives. You start paying the monthly lease agreements once the solar system is running. Because the lease amounts may keep changing over the duration of the lease, it is important to understand the terms before signing it.
Number of Monthly Installments for Zero down financing
When installing solar panels, the solar company will first evaluate your daily energy solar needs. They will also do a site visit to evaluate your roof capacity. This helps to come up with a tailor-made solar system for your premises. Usually, you need enough solar panels that can generate sufficient solar power to eliminate your monthly utility bills.
Solar companies have a simple system to calculate the number solar panels you need. This is determined by your current utility bills and the electrical systems in your house. The solar company comes up with the solar costs which include the cost of the solar panels and other gadgets used in the solar system like the inverter, cables, and switches. among others. The costs of installation and permits and inspection fees are also included.
Other factors that influence the cost of a solar system include your monthly energy needs, the place where you live, interest rates, and the net metering system. The factors mentioned above influence your solar loan monthly installments, the loan term or solar lease monthly installments and the loan term.
Pros and Cons of Zero Down Solar Financing
The main benefit of zero down solar financing is that you will not make any advance payments to the solar financing institution. You will only be obligated to make monthly installments to finance your solar loan or solar lease.
However, it is advisable to compare the zero down solar financing option with the other payment options. Compare the period you will take to complete the payment and the monthly installments in comparison to payment options with upfront costs. Then, choose the option that works best for your budget. That said, like other loans, to shorten the loan payment period, you can always reduce the principal amount by making extra payments to the solar financing institution.
Zero down solar financing makes it possible for you to reduce your carbon footprint while making savings on your monthly utility bills conveniently. Nevertheless, because you still want to get some ROI on your solar system, evaluate all your payments options well before settling on one and binding yourself to it.