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Solar Financing — Why it Works

Why Solar Financing Works

So far we’ve discussed financing a photovoltaic installation with the PACE program and with the FHA directly. Still coming in a later article is how our sole provider of quality solar panels, SunPower, also gives solar financing to our customers. The most important thing to consider in all of this discussion about finances, however, is why solar loans work in the first place.

There are Types of Loans

Some types of loans represent a valuable investment. A home loan is an example of this type of “good” loan. Other loans represent paying for a necessity. The typical car loan is an example of financing that may cost you money via the interest you pay, but it allows you to own the transportation that you need. That car loan might be paid by an allowance from your work place, or by the mileage deduction provided by the IRS. Of course, there are bad loans too — those with exorbitant interest rates or for items that quickly lose their value. When a loan represents no way to generate an income, investment wealth or a significant tax advantage, it could very well be a bad loan.

Here at Solaron of Sacramento, we constantly see evidence that a loan to purchase your own solar energy array is an example of an investment that ends up saving you money, and here’s why:

1) Solar energy systems increase the value of your home.

For every watt of solar electricity production, you increase the value of your home by $4. The average house sees an increase in value of $15,000, according to the Department of Energy. Studies also show that buyers consider solar energy installations a factor in favor of purchasing a house.

2) Solar electricity and solar pool heating pays for itself.

If your electrical bill is over $135 per month, you are essentially guaranteed that your solar financing, plus any remaining electricity charges, will be less than that amount. In effect, your solar energy system is immediately putting money in your pocket, even if you pay for it with a loan. For solar pool heating, if you already use a gas heater, a solar pool heater significantly lowers your gas bill, since there is no extra electrical cost to operate your new sun-powered pool heating system.

3) Solar electricity offers a federal tax credit.

Until the end of 2019, you can take the maximum allowable residential solar credit directly off your taxes. This isn’t just a deduction from your income — it’s like cash, directly paying off your tax liability and making it far more likely you get a refund from the IRS. The credit can also be stretched out over the following years, once it’s earned. That way, you can use only as much of the credit as you need until it is completely expended.

Besides these monetary advantages, solar energy, whether electrical or for pool heating, represents the right choice for our future. It’s better for the environment and it’s a modern technology. For more information about how you can take advantage of it with solar financing, contact Solaron today!

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