Loan fees

[rbtp]

I'm curious to see what loan fees are on your financed projects. I was quoted a 19.25% origination fee on a 1.9% interest unsecured loan from Mosaic by the installer. I don't see how it makes sense to pay $4500 for the privilege of borrowing $19,000, albeit at a low rate. I've generally read that 3-5% origination fees are common (still high I think compared to other types of financing).

[foo1bar]

"I don't see how it makes sense to pay $4500 for the privilege of borrowing $19,000, albeit at a low rate."

It makes sense for the lender.

I'd check with your local credit union (or even bank) about what loans they have available for you.
2nd mortgages, home equity line of credit, unsecured personal loan, etc.

[J.P.M.]

HERO financing usually comes with fees, but 19 + % is beyond unreasonable and seems usurious to me.

[sensij]

Pretty much all of the "solar" loans I had looked at 1 year+ ago had fees of at least 10%, up to 17%. With the low interest rate, if cash isn't available, it might still make sense, but yeah, hard to swallow.

[ButchDeal]

Pretty much all of the "solar" loans I had looked at 1 year+ ago had fees of at least 10%, up to 17%. With the low interest rate, if cash isn't available, it might still make sense, but yeah, hard to swallow.

most of the "solar" loans are really unbacked signature loans, slightly better than credit card loans. You can pay more in fees to get lower rates OR...
Best rate is for home improvement or home equity loans and pay cash.

[Amy@altE]

This article is a bit dated, but I know Admirals Bank offers solar loans in the USA. http://www.solarreviews.com/news/sun...mirals-061614/. It is not just for SunPower systems.

[rbtp]

I think I've convinced myself that the solar loans available aren't attractive, so I'm considering paying cash. My thinking was along the lines of "borrowing" the money from my investment account. I could treat it like a loan and pay it back with interest. I would set the interest rate to meet or exceed the opportunity cost of taking the money out of play (i.e. if its invested in a safe vehicle with an expected return of 4.5%, then set the interest rate to >4.5%). I would make regular payments back into the account to be reinvested. I would avoid fees and end up with more money back in my investment account than if I had left it alone.

Does this thinking make financial sense or am I off base?

[sensij]

Does this thinking make financial sense or am I off base?

It is very reasonable to apply a 4.5% discount rate to whatever you think the PV system will save on your electric bill. Making the monthly payments to yourself will take some discipline, but if you can stick with it, you will have a much better chance of truly getting the expected financial benefit from your system.

[foo1bar]

I think I've convinced myself that the solar loans available aren't attractive, so I'm considering paying cash. My thinking was along the lines of "borrowing" the money from my investment account. I could treat it like a loan and pay it back with interest.

It's a reasonable approach.

I'd probably instead try to put back the monthly savings on the utility bill and the additional cash from the tax credit.
And I wouldn't worry about the 4.5% interest and trying to figure out when I had finished "paying off" the loan.
But if considering it a "loan" makes you more diligent in saving the money, I see no harm in using that as an incentive to yourself to save.

[silversaver]

With Today's interest rates received from bank, there is no reason not to pay cash other than loan unless funds unavailable. I don't believe people are making money in their investment accounts anyway.