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As technology evolves, more and more homeowners are investing in solar power as a source of residential energy, according to the Solar Energy Industries Association. For homes located in areas that benefit from solar power, it's well worth considering the switch to this renewable energy source. Solar energy users can lower their utility bills, and financing options — including a solar loan — are available to help manage the cost of a new system.

Advantages of Going Solar

Adding solar panels to your house can provide numerous benefits. In addition to increasing your home's energy efficiency, a solar panel system will result in energy savings and lower utility costs. You'll also be using a more environmentally-friendly, renewable energy source. Today's solar energy systems can even increase your home's value as more potential buyers search for eco-friendly options. Tax incentives are another advantage; according to the IRS, owners of solar panels are entitled to a federal tax credit equal to a portion of their cost. As an owner, you may also qualify for state and local rebates or incentives.

Financing And Purchasing Solar

With an average price tag of $30,000 according to Energy Informative, the upfront investment in solar panels may seem daunting. However, there are options available for purchasing or financing a solar system. Choosing to own your system rather than lease it through a solar provider will allow you to benefit from tax credits and other incentives. Here are a few options to consider when purchasing a solar system:

  • Cash: A cash purchase allows you to own your solar system with a simple, lump sum payment.
  • Home Equity: The use of a home equity loan or a home equity line of credit (HELOC) can provide more options for solar panel purchases. Because these options are secured against your home, you may receive better interest rates compared to unsecured financing options.
  • Solar Loan: This financing option allows you to spread the cost of a new system over time with a loan specifically designed for solar power users.

Before choosing a financing option, spend time comparing the interest rates, terms, and fees of the available alternatives to ensure that you're making the best decision based on your personal finances.

Solar Loans 101

Solar loans are designed to help homeowners finance the purchase of solar panels. Longer terms for solar loans allow borrowers to set up a repayment schedule that fits into their budget. Considering the expected utility savings associated with solar energy, you may even find that your solar loan payment is largely offset by lower energy bills. Interest rates on solar loans may also be lower than other financing options such as credit cards or other unsecured personal loans.

Have you decided to join the growing number of homeowners investing in and benefiting from solar panels? If you'd like to learn more about solar loans, contact Dividend to find qualified installers.

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

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