Getting residential solar panels can be a great investment for your household since you will be able to lower your monthly energy bills and once the system has paid for itself, actually save money as a result of the low-cost to maintain the system. That being said, there are significant upfront costs to purchase the panels and install them and unless you are doing it yourself, you’re talking about hiring a contractor and paying for their labor.
So, like any other large home-improvement investment, you have two choices: pay out of pocket with cash or finance the project through a lender. Here are a few of the considerations you will want to think about when buying solar panels for your home:
1) Investment
You have a roof, you live in an area that gets a lot of sun throughout the year, and saving money on your monthly energy bill sounds great, right? Make sure you do your research before you dive in. You need to calculate what you will be saving based on your local energy provider costs and any incentives you may receive. You then need to make sure you really know what your system will cost. If you hire a knowledgeable contractor who is certified in residential solar, they will be able to put this all together for you and help you understand what the true ROI of your project will be.
2) Incentives
Depending on where you live, there may be great incentives you can take advantage of. Keep in mind that incentives can help make a huge difference in the overall cost but may be gained through your taxes and in some cases tied to financing your project versus paying in cash. Make sure you know the opportunities to help offset the cost of your investment. There are a lot of resources online but make sure you also talk to a tax professional as a lot of times your contractor or lender can not offer tax advice.
3) System Design
The design of your solar panel system is also an important factor when deciding to pay with cash or go with financing for your system. For example, you may want to consider an advanced inverter for your system as it can help cut down on your energy bills' overall cost. The additional expenses for the initial price should be taken into consideration but may be necessary depending on what will create the optimal system for your home and the local grid.
4) Financial Stability
One important factor when choosing between paying with cash or getting a loan is of course your financial stability. Take the time to consider your options even if you do have the cash available to you for such a project. If you are going with financing, make sure you have a sense of your current credit as you would with any other loan to make sure you get the best rate for your loan.
5) Additional Home Improvements
Maybe solar is the only project you are focused on right now but in cases where you are also updating other systems in your home or doing additional work, consider how this will impact either your cash on hand or your loan. Some lenders will allow you to include additional projects up to a certain amount into your loan and others may not so make sure you know what you plan to do to your home over the next few years and if you are financing your solar panels, make sure you discuss your options with your lender.
6) Resale Value
Paying cash or getting a loan can also be a factor in the resale value of your house. In some states having solar panels installed will increase the value of your home so again, look locally and talk to your real estate agent to see if there is potential as this can play a factor in your ROI calculator. On the extreme end, California is requiring that new homes be built with solar panels starting in 2023 so depending on where you live, you may in fact be ahead of the curve by having panels on your roof.
Conclusion
Want to finance your solar panel project? EnFin is a new lending partner that reimagines residential solar financing and is backed by the #1 solar manufacturer in the United States, Qcells. Get in touch with us now!
