Using renewable sources of energy like solar or wind energy is not just nature-friendly but also pocket friendly. Many of us are eager to embrace solar power’s benefits but hesitate to do so because of the cost. How can you calculate the possible savings from installing solar panels and their cost-effectiveness? The solar loan calculator is the key to solving the solar finance puzzles. Today, we will discover what is meant by solar loan calculator and how it may help you take advantage of the sun’s energy.
What is a Solar Loan?
Before we can proceed to understand what a solar loan calculator is it is important to understand what a solar loan is. A solar loan is a loan taken to set up any solar system at home or workplace (just to clear a system that runs on solar energy unlike the solar system we live in). Just like you have your home loan, car loan, or any other loan you have a solar loan introduced to encourage people to shift to using solar setups to use solar energy to power their houses, cars, etc.
What is Meant by Solar Loan Calculator?
After learning what is a solar loan, you are ready to learn about solar loan calculator. Here we are not talking about some special calculator but rather using a calculator for a special purpose. The loan that you take from a solar company or bank will have to be repaid eventually just like any other loan would have to be and so to calculate these payments in advance you need to use a calculator. This will help you successfully estimate the amount that you can expect to pay monthly or calculate the interest accumulated on the loan throughout repayment. There are many solar loan calculators online. You just need to input things like your loan amount, loan term, expected APR, the start date of the loan, etc.
What Type of Loan is Solar?
Let’s say you get a car but don’t pay up the entire amount all at once and instead borrow some money from the bank to pay for it. This would be a car loan that you take from the bank. Similarly, to set up a solar-based device like a solar panel you may need to borrow money from banks since they are pretty expensive. This money that you borrow from them specifically for buying solar panels or other such devices registers as a solar loan.
Now the next obvious question to ask would be what type of loan is solar? This is a question that can be answered in many ways depending on the parameter considered. A solar loan can be for homeowners or business owners or it can be secured or unsecured.
1. Solar Loan for Homeowners
This is the loan you take when you want to install solar panels at your home, office, shop, or other properties. It can also be said to be a solar loan for personal use since you will be using it to power your property rather than using it commercially.
2. Solar Loan for Business Owners
Another kind of solar loan is the one that business owners can take which would also be a loan for business purposes. Here you get a loan when you have a solar business, or are a solar dealer or distributor. With this, you should have understood what type of loan is solar.
Also Read: What are 4 Types of Solar Panel?
Do Banks Offer Loans for Solar?
Now that we know there are solar loans and a solar loan calculator surely there must be someone who offers these loans? In most cases, it is the bank that is offering loans to the people but in some cases, you also have special bodies belonging to a certain field that offer to finance you. Shifting towards clean and green energy consumption happens to be a movie backed by the government and so you can expect help at every step.
So if you ask do banks offer loans for solar purposes, then the answer would be yes but they are not the only ones to do so. A lot of solar companies also offer loans to people who are interested in making the switch. Depending on the type of loan you are looking for and the repayment conditions there are tons of packages out there from which you can select the ideal one for yourself.
However, if a loan is not the ideal way for you to go about then you can also lease a solar panel system. A solar loan is cheaper than leasing a solar panel but if you prefer an easy, maintenance-free way of going about reducing your bill while also helping the environment then the latter may be ideal for you. You can compare the two and find which one is ideal for you and fits your budget better before you go ahead and make a decision. Now, you must also have questions regarding are solar panels interest free.
Also Read: Buying a House with Solar Panels Already Installed: Things to Know
Are Solar Panels Interest Free?
In all honesty, there would be no need to talk about a solar loan calculator if it came without interest. Yeah, solar loans can be free but only to get a customer where the company wants them. You see a sale at various malls and arts but in reality, they are just increasing the prices of the stuff and then cutting on these increased rates and then posing them as discounted items. The same can be said for interest free solar loans.
So are solar loans interest free? With the bank, they surely aren’t but with a solar company, they can be. The trick here is to increase the price of the solar panel setup. Let’s say a solar panel is priced at 5,000 dollars now this same panel will cost 6,150 dollars and will be advertised as a solar setup available with interest-free finance. You see what happened there, right?
If that wasn’t it you can also expect to pay certain additional charges like monthly revolving credit account fee, late payment fee, payment processing fee every fortnight, customer establishment fee, change of detail fee, collection fee, repeat purchase fee, etc. and all this can add another 500 or 600 dollars or even more over the years and so a setup that should have cost you 5,000 dollars in the first place now costs you 7,000 dollars or more.
To further add to your misery, sometimes these no-interest loans exist in the loopholes which exempt them from being covered by government protection schemes or other such provisions and thus these types of loans end up costing you more in more ways than one. This should have answered are solar panels interest free.
Also See: Do You Still Have an Electric Bill With Solar Panels?
What is the Tenure of Solar Loan?
Solar loans are different from car or house loans. Using a solar loan calculator would tell you that there isn’t just a difference in percentages but also in the structure. A solar loan has to take in account the federal tax credit of 30% into account. Apart from this, there are different types of loans, and various banks and solar companies out there are giving away these loans at different conditions.
So that brings us to the most important question: what is the tenure of solar loan? Well for starters solar loans are flexible and it is a good thing. You can pay anywhere between 0 to 100% on the down payment and also you can set the term length for repayment which might be between 5 to 25 years. However, 12 and 20-year periods make for the ideal repayment duration because short-term loans mean more monthly payments while long-term loans mean more money paid in interest. Now, let’s explore is a solar loan secured or unsecured.
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Is a Solar Loan Secured or Unsecured?
Earlier we mentioned a solar loan can be of many types of which two types are secured and unsecured. Now the question is whether is a solar loan secure or unsecured.
1. Secured Loan
A secured loan is one where the loan is backed by the borrower’s asset or collateral. A solar loan can be borrowed against your home or the equipment itself.
Pros
- A secured solar loan comes with a low-interest rate since the risk involved in case of such a loan is less.
- It is easier to obtain these types of loans since you are putting collateral against them. And so the eligibility requirements are also less strict.
- Again since collateral is included the amount of loan that can be borrowed is more than unsecured loans.
- Borrowing a secured loan and making payments on time can help you improve your credit score.
Cons
- Almost anyone can get a secured loan and so it becomes easy to default on payments which can impact your credit score negatively.
- When you fail to make repayments it doesn’t just affect your credit score but the collateral gets taken away too.
- Such loans come with a few restrictions and so a loan taken for a solar panel can only be used on a solar panel.
Also See: 3 Mono PERC Solar Panel Advantages and Disadvantages
2. Unsecured Loan
On the other hand, an unsecured solar loan is not backed by an asset or collateral and is riskier than a secured loan. Such a loan can be obtained if your credit history or financial position is good.
Pros
- An unsecured loan is not backed by collateral and so you don’t risk losing anything if you fail to repay such a loan.
- An unsecured loan will come with more flexibility as you can spend the borrowed sum on anything you wish to.
- The application and approval process is quicker if you meet the eligibility requirements of the lender.
Cons
- Since there is no collateral involved the borrower needs to have a strong financial position, credit history, credit score, or something of that sort.
- The interest rates on these loans are much higher since there is no collateral to back the loan making it riskier.
- There might be hidden fees included with such loans to compensate for risks associated with such loans.
- The amount of sum you can borrow as an unsecured loan is lesser than what you can borrow for a secured loan.
So a solar loan can be secured as well as unsecured. It comes down to your choice and purpose as to which one you opt for. After learning is a solar loan secured or unsecured, let’s answer another major question solar loan seekers ask-what happens to my solar loan if I die?
Also Read: 3 Amorphous Solar Panels Advantages and Disadvantages
What Happens to My Solar Loan if I Die?
Death has often been treated as an escape be it from problems or people but man-made things made sure to not let death be an escape. So while you can escape a solar loan, someone who you have entrusted with your estate or assets certainly can’t. So what happens to my solar loan if I die, you might ask?
Just as with all other obligations it is now a burden that someone else will be bestowed with. If you have a nominee or an heir then they will be handed over all your assets and debts of which a solar loan is a part. And if you haven’t nominated anyone or don’t have a legal heir then the court will assign one on your behalf and they will be responsible for paying back the same. So rest assured you surely won’t be escaping a solar loan or any loan for that matter.
With that, we come to the end of the article in which we learned what a solar loan calculator means. We now also know what is a solar loan and what types of such loans are available for people to get. With that, we have done our bit on the clean and green revolution for the day.
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