The following are the critical loan characteristics to consider when evaluating solar loans, along with an explanation of what each one means: 

Secured vs. unsecured loans 

Solar loans come in two primary categories: secured loans and unsecured loans. 

The collateral for secured loans is often your home. As a result, they frequently offer cheaper rates, with an APR that typically ranges from 3 to 8 percent. The most popular variations are home equity loans and HELOCs (Home Equity Lines of Credit). 

Another illustration is residential PACE (R-PACE) loans backed by a lien on your property tax. PACE loans are available to those with weaker credit ratings but sometimes have higher interest rates than a HELOC or home equity loan. 

Unsecured loans are made available without an asset being pledged as security. These often call for a strong credit rating; the higher your score, the cheaper your rate. An unsecured solar loan may have an APR that ranges from 5.5 percent to 20 percent or even more. 

Rates for solar loans 

Depending on your credit score, secured loans like home equity loans and HELOCs typically carry 3-8.5 percent APRs. PACE loan rates often fall at the higher end of this range, with APRs ranging from 6.5 to 8.5 percent. 

Unsecured loans have substantially higher rate ranges. Generally speaking, the rates range from APRs of 6% to 30% or greater. Typically, obtaining a rate at the lower end necessitates having excellent credit. 

Down payment requirements for solar loans 

Many solar loans have no down payment requirements or zero down financing. 

When down payments are necessary, they are often negligible and range from $0 to $3,000. 

Lengths of solar loans 

Solar loans are available with maturities ranging from three to thirty years. However, 10- to 20-year loans are the most typical. 

Inverse relationships exist between loan terms and interest rates. Therefore, the loan rate will be lower the longer the loan term.

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