(Note: As of fall 2019, BlueWave no longer offers residential solar financing.)
Solar loans are an increasingly popular option for people interested in financing their solar panel systems. The trend away from leases and towards an ownership model like solar loans is a result of two key factors: the economic benefits and incentives available to solar customers and the greater accessibility of solar loan options.
Among companies offering solar loans, Boston-based BlueWave Solar is becoming a popular financing option for homeowners purchasing solar panel systems across the country. Their newest financing option, the FlexRate loan, allows homeowners to finance their solar panel system at competitive introductory interest rates.
How BlueWave Solar’s FlexRate loan works
Many traditional solar loans will have a fixed interest rate for the duration of the loan. BlueWave’s FlexRate loan is a bit different: as opposed to a fixed rate for the duration of the loan term, the FlexRate loan offers a variable interest rate across the loan term. For the first five years of the loan, you can finance your solar panel system at a low introductory rate. Following this, the interest rate will adjust based on the current Wall Street Journal Prime Rate plus 0.5% annually.
The Prime Rate is an adjustable rate representative of the interest rate that banks in the U.S. use when lending to creditworthy borrowers. Importantly, the FlexRate loan is designed to ensure that your personal interest rate will not dramatically increase if the Prime Rate reaches a record high – there is both an annual cap (1%) and lifetime cap (9.99%) on the loan rate adjustment to protect you should the Prime Rate escalate an unprecedented amount.
The FlexRate loan comes with two different term lengths – a 15-year and a 20-year option – and can finance a solar installation for up to $100,000. Currently, the FlexRate is offered in six states, including Massachusetts, Florida, North Carolina, New York, Rhode Island, and South Carolina, and BlueWave plans to expand coverage in the future.
Benefits of the FlexRate loan option
There are a number of benefits to financing your solar panel system with the FlexRate loan from BlueWave.
With BlueWave’s FlexRate loan, you can go solar with no money out-of-pocket. This means that if your solar panel system is covering your electricity needs and your monthly payment is lower than your old utility bill, you’ll see savings immediately.
Even if your monthly loan payment is higher than your old utility bill, you’re going to realize savings as soon as you pay off your loan (or possibly even before that depending upon the solar incentives available in your area) and continue to save money throughout the lifetime of your solar panel system.
No prepayment penalties
Another benefit of the FlexRate loan is that there is no penalty for prepayment. This benefit allows you to pay off your loan early, at any time, without incurring additional fees, even if that prepayment occurs before your sixth year when the interest rate changes.
Interest-only payment option
When you finance your solar installation with the FlexRate loan, you can elect to pay interest-only payments for the first 12 to 18 months after your solar panel system is installed. The sooner you pay off your solar loan, the sooner you’ll start generating completely free solar electricity, so taking advantage of this offering can mean higher costs over the lifetime of your investment. However, the interest-only payment option is useful should you require more immediate capital for other bills or home improvement projects in the first year of the solar loan financing term.
Solar + storage
With the FlexRate loan, you can finance both your solar installation and your solar battery storage solution as well. Both can be fully financed and rolled into the same monthly payment, so long as the total amount you’re financing is less than $100,000. The convenience of a single financier for both products helps you save time finding and closing on a separate loan for storage, and removes the possibility of confusion from paying two separate monthly loan bills.
No payments until post-installation
With loans offered from BlueWave, you can wait to begin making payments until after your solar panel installation is complete. Ideally, your solar panels will be installed soon after signing a contract, but if your solar panel installation is delayed for whatever reason, you will not be on the hook for monthly payments until after the panels are on your roof.
Is BlueWave’s FlexRate loan right for you?
Every home solar installation is different and the terms of BlueWave’s FlexRate loan will vary in regards to loan amounts, durations, and interest rates. As a homeowner, you’ll have a few different options for financing your solar projects, and the type of loan you choose will depend on your priorities.
BlueWave vs. traditional financiers
When it comes to choosing a financier, one advantage of going with BlueWave Solar over traditional loan providers is their experience and knowledge of solar technology. The solar industry is still relatively young, leading some more traditional banks to be less likely to provide financing for it. While this is less of an obstacle than it was a few years ago, the fact remains that a company like BlueWave that specializes in solar loans is sure to be well prepared to answer to any solar-specific, lending-related questions you might have.
Another advantage of BlueWave is the company’s fast approval process. If you want to finance your solar installation with a home equity loan or line of credit, it can take several weeks for the loan to close and require significant equity in your home as well as a favorable debt-to-income ratio. By comparison, although BlueWave only offers loans to qualified applicants, their loan approvals can occur within a day. As an added benefit, BlueWave does not use your home as collateral with their FlexRate Loan option– a big contrast from a traditional home equity loan.
If you have a strong relationship with your local bank and they are willing to offer you solar financing through a home equity loan or line of credit, you may want to compare the long-term benefits of that option against BlueWave’s loan options.
FlexRate vs. fixed-rate loans
When you’re selecting a solar loan option, you’ll have to make a decision on not only the financier but the type of loan as well.
BlueWave’s FlexRate loan is a unique product that’s not available from other solar lenders. Most solar loans have a fixed interest rate so you know exactly how much you’ll owe over the duration of your loan. By contrast, BlueWave’s FlexRate loan will have low-interest rates for the first five years before having variable rates that will change on an annual basis for the remainder of your loan term.
Just because interest payments change after year five does not necessarily mean that it’s a more expensive loan option. In fact, you may be able to save money using the FlexRate option instead of a fixed-rate product – especially if you plan to pay off your loan early before the interest rate changes and the introductory rates you’re offered for the FlexRate loan are lower than other fixed-rate loan options. Even if you don’t pay off your loan early, there is potential for the variable interest rates to be lower than other fixed-rate loan options if the Prime Rate falls over time.
Nevertheless, it is possible that you could pay more with the variable interest rates than you would with other fixed-rate loan options if the variable interest rates climb to a higher percentage than the percentages for fixed rate loan options. If you’re unsure of how soon you’ll be paying off the loan and you’re looking for the most stable, predictable loan option, then a fixed-rate loan from BlueWave or an alternative solar lender is worth considering.
As you compare all of your loan options, it’s a good idea to compare loan terms, interest rates, and overall expected costs before making a final decision.
Where to get a BlueWave solar loan
BlueWave loans, FlexRate and otherwise, are offered through the company’s installer network. Many of the local installers who provide solar quotes on the EnergySage Solar Marketplace use BlueWave as a loan provider. If you’re interested in a loan from BlueWave, join EnergySage today and indicate BlueWave as your preferred lender when you register your property so that installers can quote accordingly. You can also shop for loans directly on EnergySage’s Solar Loan Marketplace.