Short answer: get the cash price of the system in writing first, then compare a solar loan, a lease or power purchase agreement, and a personal loan on that same price. The CFPB has found hidden markups in some solar loans, and payments that jump if a borrower does not make a large prepayment tied to an expected tax credit (CFPB). Check the tax credit's current status before you count on it.
The federal tax credit: check before you count on it
The IRS says the Residential Clean Energy Credit equals 30% of the cost of qualified clean energy property installed from 2022 through December 31, 2025, and is not available for property placed in service after December 31, 2025 (IRS). If a sales pitch or loan for a new system assumes you will get this credit, ask in writing what credit it assumes and what happens to your payment if you do not get it. This is a general explanation, not tax advice; ask the IRS or a tax professional about your own situation.
Your options
| Option | Who owns the panels | What you pay |
|---|---|---|
| Solar loan | You | Loan payments on the amount borrowed, often arranged through the installer |
| Lease | The installer or a third-party lessor | Payments for a fixed period, often 15 to 20 years; in many cases they rise each year |
| Power purchase agreement (PPA) | The installer | A set price per kilowatt-hour for the power you use; some contracts raise the rate each year |
| Personal loan | You | Fixed payments on the amount you borrow from a lender you choose |
Option details are from the CFPB, which says solar-specific loans are often arranged at the point of sale through installers, describes typical leases as lasting 15 to 20 years with no down payment, and some PPA rates rising 1 to 5 percent a year (CFPB).
Risks the CFPB has found in solar loans
- Hidden markups: some lenders add fees, called dealer fees, that can raise the loan principal by 30 percent or more above the cash price, often without showing that they are a markup (CFPB). They can also make the interest rate look lower than it is (CFPB advisory).
- Payment jumps: some solar loans re-amortize at a higher monthly payment around the 19th month unless you make a large prepayment, frequently 30 percent of the principal, the size of the expected tax credit (CFPB). The advisory notes this can happen whether or not you get a credit (CFPB advisory).
- Liens: lenders commonly file a UCC lien on the panels. It is not on the house itself, but some places treat it as applying to the whole property, so it may need to be released or subordinated before you sell or refinance (CFPB).
- Savings claims: energy savings are hard to predict, and you may also pay for upkeep and repairs (CFPB advisory).
Example: what a 30% markup and a prepayment mean
This example uses a made-up system with a $20,000 cash price.
| Item | Amount |
|---|---|
| Cash price | $20,000.00 |
| Amount borrowed with a 30% markup | $26,000.00 |
| Extra principal from the markup | $6,000.00 |
| Prepayment of 30% of that principal | $7,800.00 |
$20,000 x 1.30 = $26,000, and $26,000 x 0.30 = $7,800. In this example, a borrower who cannot prepay $7,800 by the deadline would face a higher payment on the rest of the loan.
Example: a personal loan on the cash price
This example borrows the $20,000 cash price at 11.90% APR, the Federal Reserve's August 2026 average for 24-month personal loans (G.19). The 60-month line uses the same rate for illustration; your rate and the terms you are offered may differ.
| Term | Monthly payment | Interest | Total paid |
|---|---|---|---|
| 24 months | $940.54 | $2,572.96 | $22,572.96 |
| 60 months | $443.88 | $6,632.80 | $26,632.80 |
$20,000 + $2,572.96 = $22,572.96, and $20,000 + $6,632.80 = $26,632.80. For a loan secured by your home, which puts the home at risk, see the HELOC vs personal loan guide. For rates that can change, see the fixed vs variable rate guide.
Door-to-door sales
The CFPB says companies use door-to-door salespeople to pressure homeowners into solar loans, and suggests asking for the cash price, getting a loan offer from a bank or credit union to compare, and getting written proposals from more than one installer (CFPB advisory). Under the FTC Cooling-Off Rule, a seller in a door-to-door sale must tell you that you may cancel before midnight of the third business day after the sale (16 CFR 429.1). The guide to canceling a loan covers what the rule includes.
Questions to ask
- What is the cash price of the system, and how much of the loan amount is fees?
- Does the payment change if I do not make a prepayment, and by when?
- What tax credit, if any, do your numbers assume?
- Will you file a lien, and how is it released if I sell or refinance?
- For a lease or PPA: does the payment or rate rise each year, and what happens if I sell the house?
This guide explains federal rules and CFPB findings in general terms. It is not legal advice.
Start your loan request How our service works
Sources
- IRS: Residential Clean Energy Credit
- CFPB: Issue Spotlight: Solar Financing (August 2024)
- CFPB: Consumer advisory: Steer clear of costly and complex loans for solar energy installation
- 16 CFR 429.1: the FTC Cooling-Off Rule (notice of the right to cancel a door-to-door sale)
- Federal Reserve: G.19 Consumer Credit (released October 7, 2026), terms of credit, August 2026: credit card plans and 24-month personal loans
Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.