Dealer fees can be built into the financed price
Some solar lenders charge fees through the installer or sales channel that are embedded in the loan principal instead of appearing as a separate line item paid at closing.
That means the homeowner may borrow substantially more than the system's cash price even when the loan advertises a relatively low interest rate.
Always request the cash price
The simplest diagnostic is to ask what the identical solar system costs if purchased without the proposed financing. The gap between that price and the financed principal is an important number to understand before comparing APRs.
- Cash price for the solar-only scope.
- Financed contract price or loan principal.
- APR and loan term.
- Total of scheduled payments.
- Any prepayment or re-amortization conditions.
APR and financed principal answer different questions
APR describes the cost of credit under the loan disclosure rules, but a homeowner also needs to know whether the underlying project price was increased before the loan began.
Two loans with different APRs can reverse order when total financed principal and term are included.
Compare cost per watt using the cash-equivalent solar price
When comparing installers, calculate solar dollars per watt from the solar-only cash-equivalent price rather than a loan amount that includes financing markups. Keep batteries, roofing and separately itemized electrical work out of the solar-only $/W comparison.
Do not let a monthly payment hide the project price
A long term can make an expensive project look affordable on a monthly basis. Review the full price and total contractual payments before deciding whether the financing is actually competitive.