Solar loans are the fastest-growing method of financing a solar panel installation for your home or business. Across the country, more than half of all new solar installations are done with either a cash purchase or through a solar loan.
Based in sunny San Francisco, Dividend Solar Finance is a big name in the solar lending industry and serves customers in 26 states across the country. If you’re comparing solar quotes from a few different solar installers, there’s a good chance that you have received an offer for an EmpowerLoan™ option from Dividend.
How Dividend Solar financing works
Solar shoppers typically have a few different ways to finance their solar panel installation. People who are less concerned about maximizing their financial savings can sign a solar lease or PPA with a solar company. Homeowners who want to access the higher financial benefits that come from owning the system outright typically choose to buy it, either in cash or with a solar loan. These solar loans can come from a bank or a specialized solar lender.
Dividend Solar is a specialized lending company that offers loans to homeowners through their network of solar installers across the country. According to GTM Research, Dividend Solar is the fourth largest solar loan provider in the country.
The lender’s market share is growing quickly – in the first half of 2017, the number of solar quotes including a Dividend loan on the EnergySage Solar Marketplace doubled from the previous six months. Currently, Dividend Solar is the second most popular solar lending option on the EnergySage Solar Marketplace. Nearly 12 percent of quotes to solar shoppers on EnergySage offered a financing option from Dividend.
Dividend solar loans are offered to homeowners primarily through their solar installer network. When your installer creates a quote for a solar energy system installation, they often include a built-in financing option from a company like Dividend (note: when you join the EnergySage Solar Marketplace you can simply indicate a preference for their loan option during registration).
Dividend’s solar lending options
Every home solar installation is different, and Dividend’s product offerings are customizable to customer needs. Loan amounts, terms, and interest rates will depend on the specifics of each installation.
In addition to the EmpowerLoan™, which functions like a conventional loan product, Dividend also has a PACE (Property-Assessed Clean Financing) loan product for its customers in California.
PACE loans are repaid through annual property taxes, rather than a monthly payment. Typically, payments are spread out over the course of 20 years. With PACE loans, homeowners are typically cash flow positive from day one, because they see the financial benefits of solar for months before their first loan payment is due. Borrowers with lower credit scores often prefer PACE loans, as the lending is tied to the property rather than the individual’s credit history.
Loan terms and interest rates
According to quote data on the EnergySage Solar Marketplace, Dividend solar loan terms range from 10 to 25 years. Borrowers can pay off the loan at any time with no prepayment penalties.
Interest rates on Dividend loans will vary based on the customer. In 2017, options offered to EnergySage users had interest rates ranging from 3.99 percent to 7.49 percent.
Additional benefits of Dividend loans
The EmpowerLoan from Dividend comes with a few additional benefits that make it distinct from other loan options. According to the Dividend website, every system financed with the EmpowerLoan is protected with a minimum 10-year workmanship warranty. Customers also have the option to add a 20-year third party extended service plan.
Dividend Solar financing vs. traditional bank loans
As mentioned above, homeowners have a few different sources of financing for their solar projects. EnergySage solar shoppers who finance their purchase will typically choose either a loan from a traditional bank or a loan from a specialized lender like Dividend. The type of loan you choose depends on your priorities.
Solar is a relatively new technology, and some traditional banks may be hesitant to provide financing for it. While this is less of an issue than it was a few years ago, the fact remains that a company like Dividend that specializes in solar loans is sure to be prepared with answers to any solar lending-related questions you might have.
Another area where Dividend shines is in its 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 you need to have significant equity in your home as well as a favorable debt-to-income ratio.
By comparison, while Dividend only offers loans to qualified applicants, approvals can happen on the same day (in as little as five minutes), making your solar financing process much smoother. As an added benefit, unlike a home equity loan, Dividend’s EmpowerLoan does not use your home as collateral. (Note that if you choose a Dividend PACE loan, it will act as a lien on your home.)
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 Dividend’s solar loan option.
Where to get a Dividend solar loan for your home or business
Dividend loans are offered through the company’s installer network, which means you have to work with your solar installer to finance with Dividend. Many of the 450+ local installers who provide solar quotes on the EnergySage Solar Marketplace use Dividend as their loan provider. If you’re interested in a loan from Dividend, simply join EnergySage today and indicate Dividend as your preferred lender when you register your property.