How a solar loan works
With a solar loan you own the system and borrow to pay for it, usually over 10 to 25 years. That is different from a lease or a power purchase agreement, where a company owns the panels and you pay to use them. Many solar lenders record a UCC-1 fixture filing in the county records against the equipment. It is not a mortgage, but title companies often ask for it to be paid off or released when the home sells.
The loan is a contract with the lender, not the installer. The installer is usually paid in full early on, and the lender, or a servicer it hires, collects your payments for the life of the loan.
The dealer fee
Many low-rate solar loans carry a dealer fee: a charge the lender takes from the installer, usually built into the price you finance. In its August 2024 report on solar financing, the Consumer Financial Protection Bureau said these fees "typically range from between 10 to 30 percent of the cash price but can exceed 50 percent." Its example: a system with a $30,000 cash price and a $9,000 fee becomes a $39,000 loan.
The fee rarely appears as a line item. The way to see it is to ask for the cash price and the financed amount side by side.
Why the payment can jump in month 19
Many solar loans are written with a lower starting payment that assumes you will make a large prepayment, often about 30 percent of the principal, sized to the federal tax credit. The CFPB found these loans often "re-amortize at a higher monthly payment amount at the 19th month of the loan term" if that prepayment has not been made. If your payment rose suddenly, check your loan agreement for a prepayment amount and date.
The federal solar credit ended for new systems
For homeowners who buy their system, the IRS says the residential clean energy credit (section 25D) is not allowed for expenditures made after December 31, 2025, and an expenditure counts as made when installation is completed, not when it is paid. A loan quoted today that still assumes a 30 percent credit prepayment deserves a hard look. If your system was finished in 2025 or earlier, ask a tax professional whether you can still claim it.
If your installer went out of business
The loan does not end with the installer. Keep paying while you sort out warranty and service, because a missed payment hurts your credit and does not cancel the debt. Your panel and inverter warranties come from the manufacturers and usually still work; the installer's own workmanship warranty usually does not.
If you believe you were misled when the system was sold, a consumer attorney can tell you whether you have a claim to raise with the company that holds your loan. Guides for specific lenders and servicers:
- GoodLeap loan when the installer is out of business
- Solar Servicing LLC and former Mosaic loans
- Dividend Finance solar loans
- Solar installer bankruptcy tracker
Selling a home with a solar loan
Most solar loans are paid off at closing, or the UCC-1 filing is released, so the buyer gets the system free and clear. Order a payoff statement from your servicer early, because a filing nobody planned for can delay closing. See selling a house with solar panels for the full checklist.
Questions to ask before you sign
- What is the cash price, and what is the financed amount? The difference is the dealer fee.
- Does the payment change if I do not make a prepayment? When, and to how much?
- Does the offer assume a federal tax credit? For systems finished after 2025, the residential credit does not apply.
- Will the lender file a UCC-1 against the equipment, and how is it released when I sell?
- Who services the loan, and who honors the workmanship warranty if the installer closes?
Common questions
A dealer fee is a charge the lender collects from the installer, usually built into the price you finance. The Consumer Financial Protection Bureau reported in August 2024 that these fees typically range from 10 to 30 percent of the cash price and can exceed 50 percent. Ask for the cash price and the financed price side by side before you sign.
Many solar loans are written so the payment re-amortizes, often around month 19, if you have not made a large prepayment, often about 30 percent of the principal, sized to the federal tax credit. If you did not make it, the payment rises. Check your loan agreement for the prepayment amount and date.
For homeowners who buy their system, the IRS says the residential clean energy credit is not allowed for expenditures made after December 31, 2025, and an expenditure counts as made when installation is completed. Systems finished in 2025 or earlier may still qualify on that year's return. Ask a tax professional about your situation.
Yes. The loan is a contract with the lender, not the installer, and it continues. Keep paying while you sort out warranty and service. If you believe you were misled when the system was sold, a consumer attorney can tell you whether you have a claim to raise with the company that holds your loan.
- Consumer Financial Protection Bureau, Issue Spotlight: Solar Financing, August 7, 2024
- IRS FAQs on sections 25C, 25D and related credits under Public Law 119-21, read November 4, 2026
SolarDisclosure is not a lender, a law firm, or a tax adviser. This guide is general information, not legal or tax advice. Published November 4, 2026.