Financing your solar system is for most people an easy conversion from electric payment to guaranteed solar loan payments for the next 25 years.  The next best thing to renewable energy is locking in your energy cost.  To date, most solar loans are realistically pretty easily obtainable which is why solar energy is making a sweep through Florida.  Not quite part of the sales discussion yet is the "Truth in Lending Act" with Solar financing, but it should be. 

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I think the worst thing we found out

during our short time with a Solar Company is how some of the Solar Companies sell their products and services with low interest rates financing with an un-disclosed high lender fee.  It took a lot of nagging with our ex-boss before he finally started giving up some vague information, but stated it was better for our understanding if we stuck to the script.  One of our bi-weekly meeting, the VP of sales stated the company was not really selling solar, they were really selling financing.  This Solar company invested a lot of time training their agents how to use an Excel Spreadsheet their company set up so the agent could easily enter in the total price of the solar panel system and the computer program would generate the payments with no discussion of the high charges for the lower interest rate loans.  Those are hidden. The truth is they don't want their sales people knowing the truth either so they don't mess up the sale.   It's not entirely the salesperson on the phone or at your home fault, this is just a highly kept secret.  Some homeowners ask for a total cash price vs. a total financed price, but if you intend on financing, you may not go down this path.  This is path that will find a true financed total verses cash, but it still doesn't show you the lender fee you until you print the loan documents.  Here is where the "Truth in Lending" document exists, but you have to be savvy to look for it even then.   The loans on solar panels are credit driven.   So far most lower interest rate loans don't require verification of income making them high risk loans.  I want to say that the solar loans still help you achieve your goal of lowering your payment and there are more loan programs than just the very low interest rate loans.  The point is to give the consumer truth and full disclosure.  The consumer will save still money every year as the energy cost continue to rise and they will be helping the planet with clean energy.  If you pay cash as an example for a $25,000 system and your electric bills stay the same forever at $180, you would pay back the system in 5 years 2 months and save over $120,000+ over the life of the warranted system.

 

The rabbit hole began

because we truly support solar energy and we too signed a contract to have solar.  Unfortunately, our Gun-Ho salesman/boss stuck a 30 % lender fee on our loan paperwork without asking and without explaining.  30% lender fee on our combo loan of roof, solar panels and spray foam totaled $27,000.  That did not included the 3.99% interest on the loan.  Even though we asked and asked, our boss kept swerving his answer to say that in his opinion "this low monthly payment was the best way to go".  Several times he did referred to a lender fee as a VIG ( I didn't know what a VIG was??) He would state: "You have to pay the VIG for the financing".  In the end, we signed a contract out of trust knowing I could print and review the documents within the next couple of days.  The next day I printed and reviewed the contract.  I was utterly amazed when I found the lender fee was 30% of the total loan which the boss referred to as "the VIG".  That's when I looked up the term VIG.   It is a mobster term used for charging a high yield for a loan. 

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Normal procedures

in a sales presentation is after you are happy with a price and ready to take the next step, a solar rep will send you an electronic contracts via email and have you sign.  For everyone, the electronic contract comes on your computer or telephone screen, and you click the tabs to stop at the places you need to sign or initial and then it's quickly over.  Or you could scroll through all the many many pages and read it then.  90% of the public will not read the contract and trust the salesperson.  The sales contract was not the problem, it was the financial loan paperwork.  There lays the hidden truth of the lender fees for the loan that was not discussed.   Full financial disclosure is what was missing from this solar rep's verbal presentation.  It was found on the lender docs when I printed and reviewed next day.

 

Wow!! I was treated to NO true disclosures

and I worked for them so you know you will get the same treatment or worse.  I felt so dumb and betrayed.  I understand the reason for the lender fee, but the public deserves full disclosures.  If I was financing just the solar panels "only" on a system price of $30,000, I would have been okay with a $9,000 lender fee if I was going to keep the loan for the full 25 years, but again my options were avoided and not discussed.  The only way to discuss financing is always with the truth and full disclosures and for this reason alone, the Solar Industry needs a governing power for ethics.  There are more reasons discussed in this website, but failure to abide by the Truth in Lending is punishable in the banking business.

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Calculating the solar loan payment is used to compare apples to oranges

(your electric bill verses your new loan amount) so they can show the solar power monthly loan payments are cheaper than your electric bill with a lower interest rate even with the lender fee added.  The loan is financed over 25 years so the payments are typically less than your current monthly electric bill that if left as a electric/utility bill will last forever (some agents refer to this as renting the energy, not owning it).  A higher interest rate will likely look similar to your current electric bill or maybe slightly higher and that's okay especially when the cost of energy goes up every year to satisfy the stockholders of the electric company or if you plan on paying the solar panels off early it wouldn't make sense to pay a huge lender fee, but that wasn't explained.  Salespersons may discuss your interest rate options, but they don't disclose the amount of the lender fee.  Kinda like dealing with a car salesperson.  They try to stick to just discussing the payment amount.  As I stated before, the solar sales rep likely doesn't even know how much the lender is charging.  The solar sales reps are trained using an Excel calculator that doesn't show lender fees to them either. 

 

A lot more savings comes year by year when the electric company keeps raising the energy rate

per watt.  The electric companies initiate the increase when it is not as apparent.  For us in the south, the electric company increases the cost per watt in the winter months as your energy usage is typically less so an increase is not so obvious until you hit the higher energy months of summer.  Big picture all of this could have been okay if the sales rep gave us a full disclosure and that is the way we wanted to handle the deal.  If we held the loan long term, it certainly could have been worth it.  The big bomb to us was the high lender fee on the low interest loans and the non disclosure that we could have avoided it since our objective was not to hold this loan long term and our boss knew it.  So why would he do this?   Lenders lend money to make money, fair enough. One way or another, the lender will receive a good yield if you go with one of the solar loan companies.  These type of loans still will help you achieve the long term goal which is to lock in the energy payment for the next 25 years and, after the loan payoff, you will have $0 energy costs (free) as long as the panels last. 

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In the bank's perspective and in case of a loan default,

the Lenders who write these loans know that they will not likely go on top of an owner's roof and assume the liability of damaging the roof removing the solar panels and the liability of any accidents is not a process the lender likes. If the borrower defaults on the loan, pretty much the lender's alternative is to report late payments on the borrower's credit as opposed to getting the collateralized property back.  A no income verification loan and hard to recoup collateral loan gets a high lender fee as compensation for the risky loan.  The lender charges an upfront lender fee and adds it to the loan amount.  They collect the lender fee when the loan closes and may sell the loan afterwards just like banks and other lenders financing real estate. In the end, you could use one of these lenders or you could seek out financing through your own sources to seek better terms. 

 

That is why it is so important to deal with a reputable solar company.  

If you would like us to help you get 3 bids from highly reputable solar companies, please fill out the contact form below.  We try to reply as soon as possible, but please give us up to 24 hours to reply in case we are busy with other clients.  We hope we can help you find the right system for the right price from a reputable company with full disclosures.  Solar is a very wise investment done correctly.