How to Finance Your Solar Energy System
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Financing Options for Solar Energy Systems: A Comprehensive Guide
Switching to solar energy can be a smart investment for homeowners and businesses looking to reduce their energy bills, increase property value, and contribute to a sustainable future. However, the upfront cost of a solar energy system can be significant. Fortunately, there are several financing options available that make solar more accessible. This article will explore the various ways to finance a solar system, including solar loans, key considerations when choosing a financing option, and a list of leading solar financing companies serving Indiana homeowners and businesses.
How Homeowners and Businesses Finance Their Solar Systems
Most Indiana homeowners and businesses use one of the following financing methods to install solar panels:
Cash Purchase – Paying upfront for a solar system provides the highest return on investment, as there are no loan interest payments, and owners can take full advantage of tax incentives (federal tax credit) and any rebates.
Solar Loans – Many financial institutions offer loans specifically for solar panel installations, allowing owners to spread out the cost over time. Keep in mind, Solar loans often (not always) have “dealer fees” built into their loans. These are often hefty fees that are charged to the installer, but passed along to you in the form of higher project costs. Be careful here, as these dealer fees and how they effect overall project costs can be confusing. We’re happy to help you review the quote.
What about Leases and Power Purchase Agreements (PPAs)? – Leases allow businesses to use solar energy without owning the system. Instead, they pay a fixed monthly fee or a rate per kilowatt-hour for the power generated by the system - In Indiana, this would be a potential option for commercial systems, where the landlord owns the system and leases it to a tenant. For residential, PPA’s are very common in other states, but not allowed in Indiana.
Home Equity Loans and Lines of Credit – Homeowners may use equity in their property to secure financing for solar installations, often at lower interest rates than unsecured loans. We always recommend checking with your bank of choice as well as any others your installer recommends.
Government and Utility Programs – Unfortunately, Indiana does not offer substantial incentives to help cover the cost of solar, but the Federal government offers REAP grants, which are available to businesses that either produce an agricultural product or are located in a rural area in Indiana.
Understanding Solar Loans
Solar loans work similarly to other types of home improvement loans but are tailored for renewable energy systems. Here are some key aspects to consider:
Secured vs. Unsecured Loans – Secured loans use collateral (such as home equity), typically offering lower interest rates. Unsecured loans do not require collateral but may have higher interest rates.
Loan Term Length – Longer loan terms reduce monthly payments but increase the total interest paid over time. Longest loan terms are often in the 25 year range. Many financing companies offer a wide range of products, but your installer might only mention a few - be sure to inquire!
Interest Rates – Fixed-rate loans provide predictable payments, while variable-rate loans may fluctuate over time.
Credit Requirements – Higher credit scores often result in better loan terms.
Prepayment Penalties – Check if a lender charges fees for early repayment.
What to Look Out for When Financing a Solar System
Total Loan Cost – Consider both the interest rate, loan term, and total project cost to determine the overall cost of financing. Sometimes the interest rate remains the same, but the project cost might be increased to cover “dealer fees” that are charged to the installer and passed along to you.
Eligibility for Incentives – Ensure the financing option allows you to take advantage of federal tax credits and SREC’s.
Reputation of the Lender – Work with reputable financial institutions. Do your own research and review any recent news stories about the company. A few years ago some larger solar finance companies were entangled with an disreputable installer that caused a variety of issues.
Hidden Fees – Look out for origination fees, processing fees, dealer fees, and potential penalties. Note! many Solar lenders will adjust their rates if the amount of your tax credit is not applied to the loan balance within a certain time frame. Check if this is how your loan works.
Take your Time to Review Financing Options - Some solar salesman will seek what they call a “one call close.” This is where they try to get you to sign a contract at the first meeting. This typically means you don’t have the opportunity to adequately review the financing details (or the installation agreement). Always request full copies of the loan documents and take your time to review. I often recommend to avoid any companies that try a “one call close.”
Popular Solar Financing Companies
Below is a list of leading solar financing companies that offer loans and financial solutions for residential and commercial solar projects. Their offerings and rates can change often - be sure to double check. Note, Many financing companies only work through their certified installers. This means if you contact them directly, they likely will not be able to provide you with the loans details you’re seeking and will refer you to an installer.
Hoosier Hills Credit Union (Indiana Based)
Summary: A member-owned credit union providing solar financing solutions.
Website: www.hoosierhills.com
Solar Loans: Offers solar-specific loans with competitive rates and flexible terms ($90K up to 15 years term).
Credit Human
Summary: A member-owned credit union providing solar and energy efficiency financing solutions.
Website: www.credithuman.com
Solar Loans: Offers solar-specific loans with competitive rates and flexible terms.
Mosaic
Summary: Filed for Chapter 11 bankruptcy in June 2025. Cited macroeconomic headwinds, uncertainty about tax credits, and high interest rates.
Website: www.joinmosaic.com
Solar Loans: Provided fixed-rate loans with no prepayment penalties.
Enfin Financing
Summary: Specializes in affordable and flexible solar financing options.
Website: www.enfin.com
Solar Loans: Provides customized loan options with quick approval processes.
Dividend Solar
Summary: A trusted name in solar financing, offering affordable solutions for homeowners.
Website: www.dividendsolar.com
Solar Loans: Provides fixed-rate loans with transparent terms and conditions.
Energy Loan Network
Summary: A nationwide lender offering financing for energy-efficient home upgrades.
Website: www.energyloannetwork.com
Solar Loans: Competitive loan options with quick approvals and favorable rates.
Salal Credit Union
Summary: A credit union focused on providing green energy financing solutions.
Website: www.salalcu.org
Solar Loans: Offers affordable financing options tailored for renewable energy projects.
Need Help Choosing the Right Solar Financing Option?
Choosing the right solar financing option can be overwhelming, but we are happy to help. Whether you need guidance on loan terms, lender selection, or eligibility for incentives, the Solar Commission is ready to assist.
Our top frequently asked questions:
