Solar panel installations have surged in popularity as homeowners seek to reduce energy costs and environmental impact. However, with average system costs ranging from $29,000 to $30,000, most homeowners turn to solar loans to finance their investment. Understanding current solar loan interest rates is crucial for making an informed financing decision that maximizes your long-term savings.
In 2025, solar loan interest rates vary significantly based on lender type, credit score, and loan structure. While rates can range from as low as 6% to as high as 36% APR, most qualified borrowers can expect rates between 6% and 17% APR. The key is knowing where to look and how to position yourself for the best possible rate.
This comprehensive guide examines current solar loan interest rates across different lender categories, factors that influence your rate, and proven strategies to secure the lowest possible financing for your solar installation.
Current Solar Loan Interest Rates in 2025
Solar loan interest rates in 2025 reflect broader economic conditions while maintaining competitive positioning due to increased lender participation in the clean energy market. Here’s a breakdown of current rate ranges by lender type:
National Average Solar Loan Rates
The national average for solar loan interest rates currently spans 6% to 36% APR for qualified borrowers. This wide range reflects varying credit requirements, loan terms, and lender risk assessments. Most homeowners with good credit (680+ FICO score) can expect rates in the 7% to 12% range.
Credit Union Solar Loan Rates
Credit unions consistently offer some of the most competitive solar financing options, with rates typically ranging from 5.94% to 9.19% APR. Notable examples include:
- Star One Credit Union: 6.25% APR for excellent credit
- USC Credit Union: 5.94% APR with autopay discount (as of June 2025)
- Navy Federal Credit Union: 8.99% to 18.00% APR range
- Local credit unions: Often 1-2% below national averages
Credit unions’ member-focused approach and non-profit structure enable them to offer lower rates and more flexible qualification criteria compared to traditional banks.
Online Lender Solar Loan Rates
Online lenders provide quick approval processes but typically charge higher rates, ranging from 6.49% to 35.99% APR. Leading online solar lenders include:
- LightStream: 6.49% to 25.29% APR with autopay discount
- SoFi: 8.99% to 35.49% APR with no origination fees
- Best Egg: 6.99% to 35.99% APR for fair credit borrowers
- Upgrade: 7.99% to 35.99% APR with co-signer options
While online lenders offer convenience and fast funding, borrowers with excellent credit often find better rates through credit unions or specialized solar lenders.
Solar-Specific Lender Rates
Specialized solar financing companies offer products designed specifically for solar installations, with rates typically ranging from 3.99% to 16.99% APR. These lenders understand solar projects’ unique characteristics and often provide:
- Combo loan structures accommodating tax credits
- Extended terms up to 25 years
- No down payment options
- Reamortization features for tax credit application
Commercial vs. Residential Rate Differences
Commercial solar loan rates typically run 0.5% to 2% higher than residential rates due to larger loan amounts and different risk profiles. Commercial rates currently range from 5% to 19% APR, with specialized lenders like Climate First Bank offering fixed rates around 8.99% for qualified businesses.
Factors That Determine Your Solar Loan Interest Rate
Several key factors influence the interest rate you’ll receive on a solar loan. Understanding these factors helps you optimize your application and potentially secure better terms.
Credit Score Impact
Your credit score is the primary factor determining your solar loan interest rate. Here’s how different credit score ranges typically translate to rates:
- Excellent Credit (750+): 4% to 8% APR
- Good Credit (680-749): 7% to 12% APR
- Fair Credit (620-679): 12% to 20% APR
- Poor Credit (Below 620): 20% to 36% APR or may not qualify
Most lenders require a minimum credit score of 650, though some specialized programs accept scores as low as 580 with additional requirements or higher rates.
Debt-to-Income Ratio Requirements
Lenders evaluate your debt-to-income (DTI) ratio to assess repayment capacity. Most solar lenders prefer DTI ratios below 40%, though some accept up to 50% for borrowers with excellent credit. A lower DTI ratio can help secure better rates and terms.
Loan Term Length Effects
Solar loan terms typically range from 8 to 25 years, with term length significantly impacting both interest rates and total borrowing costs:
- Short Terms (8-12 years): Lower rates but higher monthly payments
- Medium Terms (15-20 years): Balanced rates and payments
- Long Terms (20-25 years): Higher rates but lower monthly payments
Secured vs. Unsecured Loan Differences
Most solar loans are unsecured personal loans, meaning they don’t require collateral. However, secured options using home equity typically offer lower rates:
- Unsecured Solar Loans: 6% to 25% APR, no collateral required
- Home Equity Loans: 4% to 12% APR, home as collateral
- HELOC for Solar: Variable rates, often starting below 6%
Down Payment Effects on Rates
While many solar loans offer zero-down options, making a down payment can reduce your interest rate by 0.25% to 1%. Down payments also reduce the total amount financed, lowering overall interest costs.
Geographic Location Variations
Solar loan rates can vary by state due to local competition, regulations, and solar incentive programs. States with robust solar markets like California, Texas, and Florida often have more competitive rates due to increased lender participation.
Types of Solar Loans and Their Interest Rates
Understanding different solar loan structures helps you choose the option that best fits your financial situation and maximizes the benefit of available tax incentives.
Combo Loans (Bridge Loan Structure)
Combo loans are designed specifically for solar installations and consist of two components:
- Primary loan for the net system cost (after tax credit)
- Bridge loan covering the tax credit amount
For a $29,000 system with a 30% tax credit, you’d have a $20,300 primary loan and an $8,700 bridge loan. Rates typically range from 5% to 15% APR, with the bridge portion often at a higher rate that’s paid off when you receive your tax credit.
Reamortization Loans
Reamortization loans allow you to apply your tax credit as a principal payment, then recalculate your monthly payment based on the reduced balance. These loans typically offer:
- Initial rates: 6% to 18% APR
- Flexible payment adjustment after tax credit application
- No prepayment penalties for tax credit application
Personal Loans for Solar
Traditional personal loans can finance solar installations but lack solar-specific features. Rates typically range from 7% to 36% APR based on creditworthiness, with terms usually limited to 7 years or less.
Home Equity Loans and HELOC Rates
Home equity financing often provides the lowest rates for solar projects:
- Home Equity Loans: 6% to 12% APR, fixed rates
- HELOC: 5% to 15% APR, variable rates
- Terms up to 30 years available
- Interest may be tax-deductible if used for home improvements
PACE Financing Rates
Property Assessed Clean Energy (PACE) financing is available in select states, with rates typically ranging from 6% to 12% APR. PACE financing is repaid through property tax assessments and transfers with property ownership.
How to Get the Best Solar Loan Interest Rates
Securing the lowest possible solar loan interest rate requires strategic preparation and smart shopping. Here are proven tactics to optimize your rate:
Credit Score Optimization Strategies
Improving your credit score before applying can save thousands in interest costs:
- Pay down credit card balances to reduce utilization below 10%
- Pay all bills on time for at least 3-6 months before applying
- Don’t close old credit cards as this can reduce your credit history length
- Check credit reports for errors and dispute any inaccuracies
- Avoid new credit applications in the months leading up to your solar loan application
Shopping Multiple Lenders
Rate shopping is crucial for finding the best deal. Focus your search within a 14-day window to minimize credit score impact:
- Start with local credit unions
- Compare online lenders for speed and convenience
- Check with your current bank for relationship discounts
- Consider solar-specific lenders for specialized products
- Get quotes from at least 3-5 lenders
Timing Your Application
Market timing can impact available rates:
- Monitor Federal Reserve policy – rates often follow fed funds rate trends
- Apply during promotional periods when lenders offer special rates
- Consider seasonal patterns – some lenders offer better rates during slower periods
Negotiation Tactics
Many borrowers don’t realize solar loan rates are often negotiable:
- Use competing offers as leverage
- Ask about rate matching policies
- Inquire about relationship discounts if you’re an existing customer
- Consider slightly higher loan amounts for better rate tiers
Using Autopay Discounts
Most lenders offer autopay discounts of 0.25% to 0.50% APR. This small reduction can save hundreds of dollars over the loan term while ensuring you never miss a payment.
Co-signer Benefits
Adding a co-signer with excellent credit can significantly improve your rate, especially if your credit is less than perfect. Co-signers take on full repayment responsibility, so choose this option carefully.
Solar Loan Rate Comparison by Lender Category
Different lender types offer distinct advantages and rate structures. Here’s a detailed comparison to help you identify the best options for your situation:
Best Credit Union Rates
Credit unions consistently offer competitive solar loan rates due to their member-focused, non-profit structure:
- Mascoma Bank: 7.29% to 8.29% APR for solar loans up to $60,000
- Star One Credit Union: 6.25% APR for excellent credit, 15-year terms
- Local Credit Unions: Often 1-2% below national averages
Advantages: Lower rates, flexible underwriting, local service
Disadvantages: Membership requirements, limited geographic availability
Top Online Lender Offers
Online lenders provide convenience and speed but typically at higher rates:
- LightStream: 6.49% to 25.29% APR, no fees, rate-beat guarantee
- SoFi: 8.99% to 35.49% APR, no origination fees, same-day funding
- Upgrade: 7.99% to 35.99% APR, accepts fair credit, co-signer options
Advantages: Fast approval, online convenience, broad availability
Disadvantages: Higher rates, less personal service
Solar Company Financing
Many solar installers offer in-house financing or partnerships with specialized lenders:
- Rates typically range from 5% to 18% APR
- Often include promotional rates for qualified buyers
- May offer combo or reamortization structures
- Streamlined approval process tied to installation
Traditional Bank Options
Major banks offer personal loans for solar but rarely specialize in solar financing:
- Rates typically 8% to 25% APR
- Standard personal loan terms and conditions
- May offer relationship discounts for existing customers
- Limited solar-specific features
State and Local Programs
Several states offer subsidized solar loan programs with below-market rates:
- Connecticut Energy Conservation Loan: 0% to 7% APR, up to $25,000
- Michigan Saves: 4.44% to 7.90% APR, up to $50,000
- California PACE Programs: Various rates, property tax repayment
Solar Loan Rates vs. Other Financing Options
Understanding how solar loan rates compare to alternative financing options helps you make the most cost-effective choice for your situation.
Cash Purchase vs. Financing Costs
While paying cash eliminates interest costs, financing can be advantageous when:
- Solar loan rates are below your investment return rate
- Preserving cash for other high-return opportunities
- Maintaining emergency fund liquidity
- Taking advantage of promotional low rates
For example, if you can earn 8% in investments but secure a 6% solar loan, financing makes mathematical sense.
Solar Lease vs. Loan Rate Comparison
Solar leases typically have implicit rates of 4% to 8%, but lessees forfeit:
- Federal and state tax credits
- System ownership and equity building
- Full energy savings benefits
- Property value increases
Even with slightly higher loan rates, ownership through financing typically provides better long-term value.
Home Equity Financing Alternatives
Home equity options often provide the lowest rates but involve additional considerations:
- Home Equity Loan: Fixed rates, predictable payments, home at risk
- HELOC: Variable rates, payment flexibility, interest-only options
- Cash-out Refinance: Potentially lowest rates, but high closing costs
Personal Loan Rate Differences
Traditional personal loans for solar typically carry higher rates than specialized solar loans due to:
- Lack of solar-specific underwriting
- Shorter repayment terms
- No accommodation for tax credit benefits
- Higher perceived risk by lenders
Impact of Federal Tax Credit on Loan Rates
The 30% federal solar tax credit is currently under threat, with Congress proposing to eliminate it by the end of 2025. Currently, the federal solar Investment Tax Credit (ITC) allows homeowners to claim 30% of their solar system cost as a tax credit through 2032. This substantial benefit has led to specialized loan products that accommodate the credit:
- Combo loans split financing between net cost and tax credit amount
- Reamortization loans allow credit application as principal payment
- Some lenders offer lower rates assuming tax credit application
Combo Loan Rate Structures
Combo loans typically feature two different rates:
- Primary loan (70% of system cost): Lower rate, longer term
- Bridge loan (30% of system cost): Higher rate, 12-18 month term
For example, on a $29,000 system:
- $20,300 primary loan at 7% APR for 15 years
- $8,700 bridge loan at 12% APR for 18 months
Reamortization Benefits
Reamortization loans offer flexibility by allowing you to:
- Start with full system financing at one rate
- Apply tax credit as principal payment without penalty
- Recalculate monthly payments based on reduced balance
- Maintain the same interest rate throughout
Payment Calculation Examples
Here’s how different loan structures affect payments on a $29,000 solar system:
Traditional 15-year loan at 8% APR:
- Monthly payment: $277
- Total interest: $20,860
Reamortization loan (applying $8,700 tax credit after year 1):
- Initial monthly payment: $277
- Payment after reamortization: $194
- Total interest saved: ~$4,640
State-Specific Solar Loan Programs and Rates
Many states offer specialized solar financing programs with subsidized rates or favorable terms. These programs can provide significant savings over traditional financing options.
Connecticut Solar Loan Programs
Connecticut offers one of the most generous state solar loan programs:
- Connecticut Energy Conservation Loan Program
- Interest rates: 0% to 7% APR based on income
- Maximum loan amount: $25,000
- Repayment terms: Up to 12 years
- No down payment required
California PACE Financing
California’s PACE programs offer unique financing structures:
- Rates typically 6% to 12% APR
- Repayment through property tax assessments
- Terms up to 25 years
- No credit score requirements in some programs
- Transfers with property ownership
Michigan Saves Program
Michigan’s statewide energy loan program offers competitive solar financing:
- Interest rates: 4.44% to 7.90% APR
- Loan amounts: Up to $50,000
- Terms: Up to 15 years
- No prepayment penalties
- Available statewide through participating contractors
Other Notable State Programs
- North Carolina: Municipal loan programs with rates up to 8% APR
- Ohio ECO-Link: 3% APR reduction on qualified bank loans
- Louisiana HELP: 2% APR loans up to $6,000
Solar Loan Rate Trends and Future Outlook
Understanding historical trends and future projections helps you time your solar loan application for optimal rates.
Historical Rate Trends
Solar loan rates have generally followed broader interest rate trends while maintaining competitive positioning:
- 2020-2021: Historic lows, with rates as low as 2.99% APR
- 2022-2023: Rising rates following Federal Reserve policy changes
- 2024: Stabilization in the 6% to 15% range for most borrowers
- 2025: Continued competitive rates due to lender participation growth
Federal Reserve Impact
Solar loan rates typically move in correlation with federal funds rates, though often with less volatility due to:
- Specialized lender competition
- Government incentive support
- Growing market acceptance
- Improved risk assessment models
Market Predictions for 2025-2026
Industry experts anticipate solar loan rates will:
- Remain competitive as more lenders enter the market
- Potentially decrease if Federal Reserve cuts rates
- See continued innovation in loan structures
- Benefit from increased standardization and reduced perceived risk
Best Timing Strategies
To optimize your solar loan timing:
- Monitor Federal Reserve meeting announcements
- Watch for seasonal promotional rates
- Consider end-of-quarter timing when lenders may offer better terms
- Balance rate timing with solar installation scheduling
Frequently Asked Questions About Solar Loan Interest Rates
What’s a good solar loan interest rate in 2025?
A good solar loan interest rate in 2025 is generally below 10% APR for borrowers with good credit. Excellent credit borrowers should target rates below 8% APR, while those with fair credit might find rates between 10% to 15% APR acceptable. Rates below 6% APR are considered excellent and typically available through credit unions or specialized programs.
How do solar loan rates compare to mortgage rates?
Solar loan rates are typically 2% to 5% higher than mortgage rates because solar loans are usually unsecured personal loans, while mortgages are secured by real estate. However, home equity loans for solar can offer rates closer to mortgage rates since they’re also secured by your home.
Can I refinance my solar loan for a better rate?
Yes, you can refinance a solar loan if you find better terms or if your credit has improved. However, consider any prepayment penalties on your current loan and ensure the new rate is significantly lower to justify refinancing costs. Some borrowers refinance after receiving their tax credit to reduce the principal balance.
Do solar loan rates vary by system size?
Solar loan rates typically don’t vary significantly by system size, but larger loans may qualify for better rate tiers at some lenders. More importantly, larger loans often provide better economies of scale for the solar installation itself, improving your overall return on investment.
What credit score do I need for the best solar loan rates?
The best solar loan rates typically require a credit score of 720 or higher. However, good rates are available with scores of 680 and above. Borrowers with scores between 620-679 can still qualify but should expect higher rates. Scores below 620 may require specialized lenders or co-signers.
Are there any fees associated with solar loans?
Solar loan fees vary by lender but may include:
- Origination fees: 0% to 10% of loan amount
- Late payment fees: $15 to $50
- Prepayment penalties: Rare but possible
- Processing fees: $50 to $200
Many specialized solar lenders offer no-fee loans to remain competitive.
Should I choose a fixed or variable rate solar loan?
Most solar loans offer fixed rates, which provide payment predictability and protection against rising interest rates. Variable rate options are less common but might start lower. Given the long-term nature of solar loans and current rate environment, fixed rates are generally recommended.
Solar loan interest rates in 2025 offer competitive financing options for homeowners ready to invest in clean energy. By understanding the factors that influence rates, comparing solar financing options, and timing your application strategically, you can secure favorable financing that maximizes your solar investment’s long-term value. However, be aware that the federal solar tax credit may be eliminated by the end of 2025, making it crucial to act quickly if you’re considering solar. Remember to factor in the current tax credit when evaluating loan structures, and don’t hesitate to negotiate with lenders for better terms. When combined with competitive solar installation costs and the long-term savings potential of residential solar systems, securing the right loan rate can make solar an excellent investment for your home and financial future.