Solar Loan vs Cash Calculator
Example: System cost: 20000 $ · Loan interest rate (APR): 7.5 % · Loan term: 15 years
| Monthly loan payment | $185 |
| Total repaid over the loan | $33,372 |
| Total interest paid | $13,372 |
Worked example
Finance a $20,000 solar system at 7.5% APR over 15 years and the monthly payment comes to about $185. Over the full 180 months you repay roughly $33,370, which means about $13,370 of that is interest on top of the $20,000 borrowed. Paying cash avoids all of that interest, but a shorter or lower-rate loan closes much of the gap while letting you keep your savings liquid.
Frequently asked questions
Is it better to pay cash or finance solar?
Paying cash gives the best lifetime return because you avoid all interest and the payback is fastest. Financing makes sense when the loan rate is lower than what your cash could earn invested, or when you want solar now without draining savings. Run the interest figure here against your expected investment return to compare.
Do solar loans have hidden fees?
Some low-advertised-rate solar loans include a dealer fee, sometimes 10 to 30% of the system price, baked into a higher cash price. Always compare the total cash price against the financed price. Enter the true system cost and true rate here so the interest figure reflects reality.
How does the tax credit interact with a loan?
The federal tax credit is based on the system cost regardless of how you pay. Many solar loans assume you will apply the credit as a lump-sum principal payment in the first 12 to 18 months; if you do not, your payment can jump. Plan to reinvest the credit into the loan to keep the payment as quoted.
What loan term should I choose?
A shorter term means a higher monthly payment but far less total interest; a longer term lowers the payment but costs more overall. Pick the shortest term whose payment your energy savings comfortably cover, so the panels effectively pay their own loan.