Solar panel financing explained: A guide to exploring the best finance options for you

Are solar panels worth it? A thousand times over, yes. In fact, solar panel financing creates a seamless path for homeowners. It allows you to save money, without having to pay the full cost right upfront.

That’s where solar financing steps in.

Whether you’re eager to reduce your carbon footprint or simply slash your electricity bills, there are many financing options available. This makes it possible to go solar without putting a strain on your wallet. Instead of forking out a large sum upfront, financing allows you to distribute the cost over time, so you can reap the savings on your energy bills from day one.

Simply put, solar panel financing eases the transition for homeowners that are looking to embrace clean, renewable energy. But how do you zero in on the right financing plan for your situation?

In this guide, we’ll navigate the various types of solar financing, break down how they work, and offer essential tips on crafting the smartest financial strategy for your solar investment.

On this page, you’ll learn:

• The different types of solar panel financing available, from solar panel loans to direct purchase options.
• How solar financing works and what to look for when selecting a plan.
• Key tips to help you reduce solar installation costs and get the most out of your solar system investment.

By the time you reach the end of this page, you should have a much better understanding of just what your solar financing options are and how to forge a savvy, cost-effective choice for your home or business.

So without further ado, let’s get right to it, shall we?

Understanding solar panel financing

What is solar panel financing?

Solar panel financing is a way for homeowners to install solar PV systems without paying the full installation cost upfront.

Instead of making a large one-time payment, you can stretch out the total cost upfront, spreading it into manageable monthly payments using a bank or financial institution.

Solar panel payment options include:

• Loans
• Leases
• Power Purchase Agreements (PPAs)
• or even cash.

Financing opens the door to solar energy for more people to experience all solar has to offer. This is especially the case for those who might not have the savings to cover the full installation costs right away.

For instance, instead of dropping £10,000 for a solar system all at once, you might secure a loan and make monthly payments over the course of several years.

This is similar to how you’d finance a car or home. This approach places the power in your hands to start reaping the benefits of solar power. You get to enjoy reduced electricity bills, without having to wait and stockpile funds for the initial investment.

What are the benefits of financing solar panels?

Financing solar panels installations offers several significant advantages.

This is especially the case for homeowners who are attuned to both their budget and what their energy use looks like:

• Lower upfront costs: Financing spreads the cost of solar panels over time, eliminating the need for a large initial payment. This is particularly valuable for families or individuals who may not have immediate access to significant funds.
• Start saving immediately: One of the most incredible perks people find with solar financing is that you can begin slashing costs with your electricity bills as soon as the system is operational. This means that even while you’re chipping away at your solar loan payments, you will see lowered energy costs on your electric bill.
• Flexible payment options: Whether you choose a loan, lease, or other financing option, you can often find a payment plan that fits your budget. For example, some solar financing options allow for fixed monthly payments, making it easy to budget and plan ahead.

Complete Overview: Comparison of the most popular solar financing options

To make sure you find the best solar panel financing options for your solar system, it’s crucial to grasp the various types available. Here, we break down the most popular methods, examples, and then provide you with the pros and cons of each approach.

Finance Option	Pros	Cons
Direct Purchase	Full ownership No interest Maximum savings	High upfront cost Not for every budget
Personal Loans	Flexible payments No large upfront cost Ownership after loan	Interest varies Credit score dependent
Mortgage Add-on	Lower interest rates Increases home value Combined with mortgage	Extends mortgage term Needs lender approval
Leasing & Subscription	No upfront cost Low payments Maintenance included	No ownership Lower long-term savings
PPA	No upfront cost Lower bills Maintenance included	No ownership Less savings than owning

Direct purchase: Pay in full with cash

If you have the financial resources, paying for your solar PV system outright is the most straightforward option. By making a direct purchase, you claim ownership of the system entirely and sidestep any interest charges or ongoing payments.

While this demands a pretty substantial investment upfront, it also delivers the highest long-term savings, as you won’t have to worry about the hassle of any additional financing costs.

Example: A homeowner in Manchester pays £8,146 upfront for a 4 kW solar system (with VAT included). Over the next 25 years, they save an estimated £16,500 – £22,875 on energy bills, depending on where they’re located. Because they paid upfront, they won’t have to worry about loan interest or fees. Of course, with the Zero VAT policy currently in place, the cost would be £6,991 for a 4 kW solar system without VAT making it and even more attractive investment.

Pros:

• ✅ Full ownership from day one
• ✅ No interest or ongoing payments
• ✅ Maximum long-term savings

Cons:

• ❌ High initial investment
• ❌ May not be feasible for every budget

Personal loans for solar panel installation: Spread the cost with monthly instalments

If paying for your solar system upfront isn’t doable, a personal loan is a popular alternative.

Banks and financial institutions often roll out loans specifically for solar panel installations. With this option, you borrow the money you need to pay for the system and pay it back in monthly instalments over a set period. The interest rate and loan conditions will depend on your credit score and the lender’s requirements.

Personal loans are an excellent way to spread the cost of solar without having to wait and save up the full amount. Just be sure to check the interest rates and loan terms carefully before committing.

Example: A homeowner takes out a £10,000 loan at 5% interest over 10 years, resulting in monthly payments of about £106. While they will pay some interest, they still start saving on energy bills right away.

Pros:

• ✅ Flexible payment terms
• ✅ No large upfront payment needed
• ✅ Full ownership of the system once the loan is paid off

Cons:

• ❌ Interest rates may vary
• ❌ Loan approval depends on your credit score

Adding to your mortgage: Ask lender for additional funds

If you already hold a mortgage with favourable terms, you might consider adding on the cost of your solar installation to your existing mortgage.

Many mortgage lenders view solar panels as a valuable home improvement that boosts your property’s worth, making them more likely to approve a loan extension or refinance. This is an attractive choice for homeowners looking to cut financing costs as it can provide lower interest rates than personal loans.

Example: A homeowner with a mortgage rate of 3% refinances to include the cost of solar panels. Their monthly payment goes up slightly, but it’s still lower than what a personal loan would cost due to the lower interest rate.

Pros:

• ✅ Lower interest rates compared to personal loans
• ✅ Increases the value of your home
• ✅ Combines solar costs with your mortgage payment

Cons:

• ❌ Extends the term of your mortgage
• ❌ Requires lender approval

Financing through installation companies: Leasing & subscriptions

Many solar installation companies offer in-house financing options. Oftentimes, these are through leasing or subscription models. The differences between leasing and subscription models can be a bit confusing. Let’s simplify it below:

Solar leasing

With a lease, the solar company handles the solar panel installation and any maintenance the panels may need on your property. In return, you pay a monthly fee to them for the use of the system. The lease typically lasts for around 20 years, and at the end of it, you can either renew the lease, buy the system, or choose to have it removed. One point to keep in mind with solar leasing often comes with an annual “escalator.” This means your monthly payment could increase each year. However, the solar company is responsible for maintenance and any upkeep throughout your lease term.

Example: A homeowner leases solar panels for £50 per month. They don’t own the solar panel system but still save on their energy bills by using the solar-generated electricity.

Solar subscription

A subscription model, by contrast, revolves around delivering ongoing services rather than simply leasing the panels.

A typical example of gaining value through a subscription plan is Soly Brain.

Launching soon in the UK, Soly Brain will help optimize your energy production by analyzing energy use across your photovoltaic system, battery, and inverter. This service ensures that energy is used at the most efficient times, whether for home appliances or EV charging.

Think of it like Netflix – just as you subscribe for access to thousands of movies, with Soly Brain, you’ll have smart control over your home’s energy use through a monthly subscription.

Pros:

• ✅ No upfront costs
• ✅ Low monthly payments
• ✅ Maintenance is usually included

Cons:

• ❌ You don’t own the system
• ❌ Long-term savings may be lower than with ownership

Power Purchase Agreements (PPAs)

A Power Purchase Agreement (PPA) is a way for you to have solar panels installed on your property without claiming ownership of the system.

Instead, the solar company retains ownership of the panels and sells the electricity the solar panels produce to you at a reduced rate. PPAs are an attractive option for homeowners looking for a way to avoid those upfront costs and immediately start saving on their energy bills.

Example: A homeowner enters into a PPA and pays 12p per kWh for solar-generated electricity, which is cheaper than their current rate from the grid.

Pros:

• ✅ No upfront costs
• ✅ Lower electricity bills
• ✅ Maintenance included

Cons:

• ❌ You don’t own the system
• ❌ Long-term savings may be lower than owning

Alternative ways to reduce the upfront cost: Apply for government grants and schemes

In the UK, several solar panel grants & funding programs step in to help shrink the cost of solar installations.

One of the most popular is the Smart Export Guarantee (SEG), in which case, solar panels pay, and homeowners get a check or discount on the electric bill for the excess electricity their solar panels generate and feed back into the grid.

Additionally, some local councils roll out grants to encourage renewable energy adoption, further trimming the upfront costs.

Example: A homeowner applies for the SEG and receives payments for the surplus electricity their system exports to the grid, helping to offset the cost of installation.

Pros:

• ✅ Reduces overall cost
• ✅ Encourages adoption of renewable energy

Cons:

• ❌ Availability varies by location
• ❌ May not cover the full cost of installation

Common mistakes to avoid when financing solar panels

Mistake #1: No FCA regulation

One of the most crucial things to verify when choosing a solar financing provider is whether they are regulated by the Financial Conduct Authority (FCA).  This ensures that the company is reputable and follows strict guidelines for consumer protection. Working with unregulated lenders can expose you to hidden fees or subpar service.

Mistake #2: Inflation-linked fees

Some solar loans come with variable interest rates, meaning your payments could creep up over time due to inflation. Always read the fine print and consider choosing a fixed-rate loan to sidestep unexpected increases in your monthly payments.

Mistake#3: Hidden fees and variable interest rates

It’s also important to be aware of hidden fees, which can sneak up unexpectedly in some financing agreements.

Fees for processing, installation, or maintenance can sometimes be buried in the fine print. Similarly, loans with variable interest rates might lure you in with a low starting rate. However, they can skyrocket over time, meaning you end up paying much more than you originally anticipated.

To avoid these pitfalls, it’s a good idea to work with a lender that’s transparent about all costs and ensures that you grasp every aspect of the agreement before signing.

Choosing the right solar panel finance option

1. Consider your budget and financial situation

Choosing the right financing option for solar panels truly depends on your personal financial situation. Before making a decision, scrutinise your monthly income, expenses, and any existing debts. It’s vital to choose a solar financing plan that fits comfortably into your budget. A good rule of thumb is that your solar panel payments should not overshadow what you currently pay for electricity.

2. Consider the pros and cons of all financing options

Every financing option presents its own set of perks and drawbacks. For example, while direct purchases unlock the highest long-term savings, they require a large upfront payment. Conversely, leases and PPAs allow you to go solar with minimal to no upfront cost, but they might limit your long-term savings since you don’t own the system.

It’s essential to carefully weigh the pros and cons of solar panels and choose a plan that aligns with your financial goals.

3. Evaluate the solar panels cost

The total cost of going solar extends beyond just the price of the panels themselves.

You also need to factor in installation costs, potential maintenance, and any additional equipment like inverters or mounting systems. Be sure to gather quotes from multiple solar installers to ensure you’re getting the best deal.

Additionally, consider the savings you’ll generate on your energy bills.

In most cases, homeowners can trim hundreds or even thousands of pounds per year by switching to solar, which can help offset the cost of financing over time.

How to finance solar panels with Soly

At Soly, we recognise that the cost of solar panel installation can be a hurdle for many homeowners. That’s why we offer a variety of flexible financing options to make solar energy within reach for more people across the UK. Whether you want to pay a small deposit upfront or spread the expense over time, we have a solution tailored for you.

• £500 deposit with payment after installation: Our latest financing offer places the power in your hands for you to pay just a £500 deposit, with the remaining balance due only after the system is fully installed and operational. This means you won’t have to fret about large payments until your solar panels are up and running, and you’re already reaping the savings on your electricity bills.This option is ideal for homeowners who want to make the switch to solar without bearing a large financial burden right upfront.
• Monthly payment plans: In addition to our deposit option, we also provide convenient monthly payment plans through Ideal 4 Finance, a trusted finance provider. With competitive rates and a swift, hassle-free application process, you can get approved for solar financing in less than five minutes, either online or over the phone.Whether you need to finance a small or large system, our customised finance plans are in place so that you get a solution suited to your budget.
• Quick and easy application process: Applying for solar financing through Soly couldn’t be easier. Our online application takes less than five minutes, and you’ll receive a personalised finance offer for your solar system almost instantly. There’s no need for drawn-out paperwork or complicated approval processes. We’ve streamlined everything to make switching to solar as effortless as possible.

Why choose Soly?

At Soly, we don’t just install solar panels, we deliver a complete solar solution. From flexible financing options to expert installation and top-tier customer support, we make the transition to renewable energy seamless.

With over a decade of experience and thousands of satisfied customers, we’re proud to stand as a leader in the UK solar industry. Our mission is to bring solar energy within reach for UK homeowners. Here’s why you should consider financing your solar panels with us:

• Trusted finance provider: We partner with Ideal 4 Finance, a respected finance company boasting a 4.6/5 star rating on TrustPilot.
• Flexible options: From low deposit plans to monthly payment schedules, we offer a range of financing solutions crafted to fit your needs.
• Expert installation: All our systems are installed by experienced, accredited professionals, and we back our solar panels with up to 25-year guarantees.

Customer satisfaction: With over 35,000 happy customers and over 10 years in the solar industry, we take pride in delivering high-quality installations and exceptional customer service.

FAQs

Who can get a loan to install solar panels?

Loans are typically what people first think of when considering a long-term payment option for solar panels. Aside from financing, another accessibility option, is paying through an unsecured credit card.

Unsecured cards provide flexible repayment options and are most useful for short-term financing with the plan of paying it off quickly. That’s because they usually have higher interest rates.

Some positives of unsecured credit cards are rewards – customers may opt-in to use their card if they have a great cashback or point system.

Having said that, when looking to secure a loan for solar panels, here are some additional requirements to consider:

• Homeowners: Must own home outright or have a mortgage that’s eligible for loans. This eligibility can be offered by the bank or a specialised green home scheme.
• Landlords: Property owners may need to get tenant approval on rental properties as well as agreements on how savings are shared.
• Businesses: No restrictions on loans here unless the lender deems a business not eligible for a loan.
• Community Groups: Community led solar projects may be eligible for some loan schemes and grants.

Can you get solar panels on finance?

Solar financing lets people divide the costs of installing a solar system into small monthly payments. For solar financing a minimum of 50% of the loan amount is not required. There is always the possibility of overpayment. This fund has strict regulatory requirements that provide full consumer protection.

Can you still get funding for solar panels?

Based upon your household income and benefits available you could receive funding. When the eligibility is met, solar panels can be part of any package of improvements available to them. Learn more about our simple eligibility check system.

Are solar panels financially viable?

Yes. Solar panel investment is rewarding. These can make it easy to save up to £1,300 a year on your electrical bill. During installation, these solar panels generate electricity, and you will be able to make a fairly quick return if you invest in one (about 7 to 9).

The bottom line: what is the best option for you?

In the end, the best financing option for your solar panel system truly depends on your financial situation and long-term goals.  If you have the means to pay upfront, a direct purchase will garner the highest long-term savings. However, if you need to distribute the cost over time, a loan, lease, or PPA might be a more suitable route.

At Soly we make solar energy simple with tools like our online configurator so you can figure out how much electricity you’ll generate and just how much you can save. We’re proud to be certified Which? Trusted Trader and highly rated on TrustPilot. At the core of our business, we believe financing options like these matter, but at the end of the day the final decision is yours.

When it comes to our bottom line, we believe that no matter which option you choose, switching to solar is undoubtedly a savvy investment that can shrink your energy costs and reduce your carbon footprint. With the right financing plan, you can reap the benefits of solar energy without the burden of a large upfront payment.

Reach out to a Soly solar expert today to learn more about our solar financing options and embark on your journey toward clean, affordable energy!