Solar loans are the fastest growing method of financing a solar panel installation. Across the country, the majority of new solar installations are purchased with either a cash purchase or through a solar loan. Based in Salt Lake City, Utah, EnerBank USA is a popular company in the home-improvement lending industry. If you’re comparing solar quotes from a few different solar installers, you may have received a loan option from EnerBank.
How EnerBank 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 greater financial benefits that come from owning a 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 lender.
EnerBank USA is a specialized lending company that offers loans to homeowners through their network of home improvement contractors across the country. Their market share is growing quickly – in 2018, the number of solar quotes including an EnerBank loan on the EnergySage Solar Marketplace more than doubled from the first half of the year to the second half. Currently, EnerBank is the fifth most popular solar lending option on the EnergySage Solar Marketplace. Around 7 percent of quotes to solar shoppers on EnergySage offered a financing option from EnerBank.
EnerBank’s solar loans are offered to homeowners primarily through their contractor 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 EnerBank (note: when you join the EnergySage Solar Marketplace you can simply indicate a preference for their loan option during registration).
EnerBank’s solar lending options
Every home solar installation is different, and EnerBank’s product offerings are customizable to customer needs. Loan amounts, terms, and interest rates will depend on the specifics of each installation.
EnerBank’s offers a number of solar loan options, including their Same-As-Cash loan, Reduced Interest loan, Combo Loan, and the PowerLoanⓇ.
A Same-As-Cash loan from EnerBank functions similarly to purchasing a solar panel system upfront without financing; it’s a short-term lending solution that comes with no interest or monthly payments, and the full loan amount is paid off at the end of the stipulated period.
This can be a loan option worth considering if you have the cash available to pay for a solar panel system out of pocket but need a wait 12 to 18 months before spending it. That said, there are downsides to this type of loan: same-as-cash loans often come with very high interest rates and fees if the loan balance isn’t paid in time. If there’s a chance that you won’t have enough money available to settle the loan at the end of the pre-determined term, it’s a good idea to evaluate alternative options.
Reduced Interest Loan
EnerBank’s Reduced Interest Loan functions just like a traditional loan that you’d obtain to finance your car. When financing your solar project with this loan, you have fixed monthly payments and a fixed interest rate entire duration of the term.
EnerBank’s Combo loan merges their Same-As-Cash loan with their Reduced Interest Loan; a portion of your total loan amount will have no monthly payment or interest rate for 12 months, while you’ll continue to make monthly payments on the other part of the loan for up to 12 years.
Why would you choose the Combo Loan over more traditional loan options? For solar projects, it can be a favorable option because you can use the same-as-cash portion of the loan to finance what you’d earn in tax credits, rebates, or other incentives. With tax credits specifically, you’ll have to wait until tax season to take advantage of this incentive. This type of loan allows you to borrow that money interest-free in the meantime, then pay it off as a lump sum once you can claim the incentives.
You can also use EnerBank’s PowerLoan to finance your solar installation. This loan is a re-amortized loan option – this means that if you use your solar tax credit benefit to pay down your loan balance by month 18, you can lower your monthly payment amount for the remainder of the solar loan term. To re-amortize your loan, you need to pay a $150 fee to EnerBank and pay a lump sum equal to at least 15 percent of the original loan amount.
Loan terms and interest rates
Loan terms and interest rates vary by loan product; EnerBank loans come with terms as short as 12 months (Same-As-Cash loans) to 20-years (PowerLoan). Borrowers can pay off any EnerBank loan early with no prepayment penalties.
Interest rates on these loans will vary based on the customer and loan product but generally range from 1.99 percent to 6.99 percent.
EnerBank USA financing vs. traditional bank loans
As mentioned above, homeowners have a few different options for financing 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 EnerBank USA. 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 EnerBank that specializes in home improvement loans is sure to be prepared with answers to any solar lending-related questions you might have.
Another area where EnerBank 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 EnerBank only offers loans to qualified applicants, approvals can happen on the same day, making your solar financing process much smoother. As an added benefit, unlike a home equity loan, EnerBank’s solar loans are unsecured and do not use your home as collateral.
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 EnerBank’s solar loan option.
Where to get an EnerBank USA solar loan for your home or business
EnerBank loans are offered through the company’s installer network, which means you have to work with your solar installer to finance with EnerBank. Many of the 450+ local installers who provide solar quotes on the EnergySage Solar Marketplace use EnerBank as their loan provider. If you’re interested in a loan from EnerBank, simply join EnergySage today and indicate EnerBank as your preferred lender when you register your property.