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Solar power is the wave of the future. Homeowners are learning that they can have a positive impact on the environment and reduce their energy bills at the same time.
There is now enough capacity to power more than 12 million homes in the United States. Perhaps even more people would convert to solar if they were not deterred by the upfront costs.
There is a misconception that switching to solar power is expensive. However, powering your home with solar energy is certain to result in cost savings.
Read on to learn how to use a solar loan calculator. We’ll help you explore the financial implications of converting to solar power and calculate more precise investment costs.
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Loan Amount
The loan amount is the first input into the loan calculator. This figure is going to vary depending on many different factors. You should shop around locally to see what solar companies are offering and who has the best deal.
The loan amount is certainly going to depend on the size of your home. Larger homes will require more solar panels to power the house.
Another factor that may drive price is location. Certain areas of the country where solar is more popular will see lower prices. Increased demand for solar drives competition and better pricing.
Also included in the loan amount are any installation or roof modification costs. These two cost elements have the ability to significantly drive up the loan amount.
Interest Rate
The interest rate on the solar loan is going to impact your monthly payment schedule. Interest rates vary depending on many macroeconomic factors. Things like Federal Reserve policy and current events can move interest rates up or down.
The loan applicant also has an impact on the interest rate. Those with better credit scores will secure a better interest rate on the loan.
Lower credit scores are a higher risk of default on the loan. The lender accounts for this risk by raising the interest rate.
Loan Term
The term, or loan duration, also impacts the payment schedule. The loan term allows the borrower to spread the loan amount over a span of several years.
Lenders like Loanpal offer many different financing packages. You could take a 5-year or 10-year loan depending on what monthly payment fits in your budget.
Lease or Finance
Some consumers opt to lease their solar conversion instead of financing it. Many of the inputs are the same including the loan term and amount.
However, there is one primary difference between leasing and financing. Homeowners that lease does not own the solar panels.
A Recap of How to Use a Solar Loan Calculator
Converting to solar power is a significant investment. You are making a substantial financial investment in solar panels and installation.
The benefit is that you will reduce monthly electricity bills. The end result is certainly a positive return on investment.
A loan calculator will help you determine your monthly payments. Inputs like interest rate and loan term are required to perform a calculation.
If you enjoyed this article about how to use a solar loan calculator, check out our blog for more great content.
