Unsecured solar loans: key questions to ask
Is a second mortgage a better option for you?
An unsecured loan is a better choice than a secured loan if you don’t have enough home equity for a second mortgage, if you would rather save your available home equity for other purchases, or if you are not comfortable using your home as collateral.
What are the interest rates for unsecured loans?
Unsecured loans generally have higher interest rates than secured loans. Sometimes contractors “buy down” the interest rates on unsecured loans, which may result in significant hidden markups in the loan amount. By directly comparing your financing options Eco Solar Home Improvement you can easily determine total costs associated with secured and unsecured loan options.
Interest rates for unsecured loans are not always comparable
Lenders offer solar installers loan options with a range of interest rates for customers. Installers pay an origination fee based on the interest rate of the loan product. Origination fees for unsecured loans do not have to be disclosed as line items, and some installers offering unsecured loans with very low-interest rates will boost the price of the solar panel system to cover their origination fee. Review multiple financing options to easily understand the relative financial obligations of each.
What are the terms for unsecured loans?
Unsecured solar energy loan terms can run from 5 to 20 years. Loans with longer terms have lower monthly payments so you can start saving right away, but you may end up paying more interest over the course of the loan.
How does the overall economics compare with secured loans?
Because unsecured solar panel loans do not require collateral, they are a higher risk for lenders. As a result, unsecured solar panel loans cost more and have lower overall financial benefits than secured solar panel loans. You can still take out unsecured loans that allow you to start saving right away by dramatically reducing your electricity bill.
What fees are associated with unsecured loans?
Unsecured solar loans with low-interest rates may have significant markups or come with undisclosed fees that the solar installer pays to the bank or lender. More often than not, these fees do not appear as a line item on solar loan quotes. These fees can vary dramatically and can be significantly higher than secured loan fees.
How long does it take to get an unsecured solar loan?
Unsecured loans can be approved quickly – often in just minutes. Secured loans usually take much longer to close.
What happens if you want to sell your house?
Because unsecured loans are not tied to your home, you can sell your home and move before the end of the loan term. However, you are still responsible for paying the loan off. As with other personal loans like credit card debt, unsecured solar energy loans stay with the person, rather than the property, and can’t be transferred to the new homeowner.
Are there tax benefits for unsecured loans?
Unlike secured loans, the interest on unsecured solar loans is not tax-deductible.
What happens if you default on an unsecured loan?
You will not lose your home, but your credit score may be impacted if the lender reports your non-payments to credit rating agencies.