Solar Loan Rates: How to Compare APR, Terms and Dealer Fees

What goes into a solar loan rate?

A solar loan lets you own your system and pay for it over time, often 10 to 25 years. Owning keeps the bill savings and the owner incentives, such as SMART 3.0 in Massachusetts, on your side. The loan you choose decides how much of those savings you keep.

Four things set the rate you are offered:

• Your credit. Your score and debt-to-income ratio decide which programs approve you and at what rate. Our financing programs generally look for a 650 score, and some go as low as 620.
• The term. Longer terms usually carry a higher rate.
• The lender and the loan type. A solar-specific loan, a bank or credit union loan, a state-backed program like Connecticut's Smart-E and a home equity loan are each priced differently.
• Fees built into the price. A lender can lower the rate by adding a fee to the amount you borrow. That is the one to watch most closely.

Whether the loan is secured also matters. Most solar loans are secured by the equipment, not the house, which keeps your home out of it. A home equity loan uses the house as collateral, which is why it can carry a lower rate. Neither is wrong; they are different trade-offs between price and risk.

Why compare APR instead of the interest rate?

The interest rate is the cost of borrowing the money. The annual percentage rate, or APR, adds the fees the lender charges to set up the loan, such as origination charges. Because it includes those fees, the APR is the better number for comparing two offers.

It has a blind spot with solar, though. A fee added to the system price, rather than charged by the lender as a loan fee, can make the loan bigger without showing up in the APR at all. The Consumer Financial Protection Bureau found that solar lenders often leave these fees out of the credit costs they disclose. So compare the APR, and also compare what you are borrowing.

One more check: lenders must show the total of payments, the full amount you will have paid by the end of the loan. It's on the loan disclosure, and it is the easiest single number to compare across offers for the same system. If one offer's total is thousands of dollars higher, find out why before you sign.

What is a solar loan dealer fee?

A dealer fee is a charge some lenders take to offer a lower advertised rate. Instead of charging it to you directly, the lender adds it to the loan principal, pays the installer the cash price, and keeps the difference. The industry also calls it a platform fee, program fee or financing fee.

In its August 2024 report on solar financing, the Consumer Financial Protection Bureau found these fees typically range from 10% to 30% of the cash price and can exceed 50%. They are often not labeled as a markup, and salespeople often don't explain the gap between the cash price and the loan amount.

Dealer fees vary by lender. Some of the lenders we work with charge them and some don't, which is why we show the cash price next to every financed option. Ask any installer for the same thing: the cash price and the loan amount for the same system. If they differ, the difference is the real cost of that low rate.

How does the loan term change what you pay?

A longer term spreads the cost over more payments, so each payment is smaller. It also gives interest more time to add up, and longer terms often carry higher rates. Connecticut's Smart-E loan shows the pattern: in October 2026 it listed 6.99% for terms up to 10 years, 7.49% for 12 years, and 7.99% for 15 years.

Some lenders also offer a choice on the same loan: a lower rate with a fee built in, or a higher rate with none. Ask to see both on the same system and compare the total you would pay over the full term. If you expect to pay the loan off early, for example when you sell the house, the no-fee version often comes out ahead, because a fee is paid in full on day one no matter how long you keep the loan.

The right term is the one where the payment fits your budget and sits comfortably below your expected bill savings. A loan that ends while the panels are still producing leaves years of savings with no payment at all.

Will your solar loan payment go up later?

Some solar loans are built around a large prepayment. The lender sets a low payment for the first 18 months and assumes you will pay down a big share of the balance by then, often 30%. If you don't, the loan re-amortizes in month 19, and the payment can jump. The CFPB found many solar loans work this way, sized around a tax refund the borrower was expected to receive.

Homeowners who buy solar in 2026 aren't expecting that federal refund, but some loan products still use the structure. Ask whether your quoted payment depends on a prepayment, and what the payment becomes if you don't make one. The payment you plan your budget around should be the one you keep for the life of the loan.

What should you ask before signing a solar loan?

Use the same questions on every offer, and get the answers in writing:

On liens: many solar lenders file a UCC-1 fixture filing on the equipment rather than a mortgage on the house. The CFPB notes it can still cloud the title when you refinance, and it has to be released or subordinated. Our guide to selling a house with solar explains how that works at closing.

A loan is one of five ways to pay. If you would rather not borrow, compare it with a lease, a PPA or a prepaid PPA. Our guide to paying for solar puts them side by side.

Frequently asked questions