Renew Financial review: Solar loan products explained

Solar loans are the fastest-growing method of financing a solar panel installation for your home or business. Across the country, more than half of all new solar installations are done with either a cash purchase or a solar loan.

Based in sunny California, Renew Financial is one of the country's leading providers of Property Assessed Clean Energy (PACE) financing. If you compare quotes for solar installations or other home energy upgrades from different contractors, you may have seen a CaliforniaFIRST or other financing option from Renew Financial.

Solar shoppers typically have different ways to finance their solar panel installation. People less concerned about maximizing their financial savings can sign a solar lease or PPA with a solar company. Homeowners wanting to access the higher financial benefits of owning the system outright typically buy it in cash or with a solar loan. These solar loans can come from a bank or a specialized solar lender.

Renew Financial's financing options look slightly different from a standard loan. Renew Financial financing is Property-Assessed Clean Energy (PACE) financing that can fund solar installations and energy improvements in California and Florida. In California, they also administer the CaliforniaFIRST program for home energy upgrades. Their financing options are a popular option in quotes on the EnergySage Marketplace.

Renew Financial and CaliforniaFIRST financing is primarily offered to homeowners through their solar installers and contractors network. When your installer or contractor compiles a quote for your home, they often include a built-in financing option from a company like Renew Financial (note: when you join the EnergySage Marketplace, you can indicate a preference for their financing option during registration).

Every home solar installation differs, and Renew Financial's product offerings are customized to customer needs. Financing amounts, terms, and interest rates will depend on the specifics of each installation.

Types of financing

Renew Financial, including CaliforniaFIRST, offers a type of home energy financing called Property Assessed Clean Energy, or PACE.

PACE financing options are repaid through annual property taxes rather than a monthly payment. Typically, payments are spread out over 20 to 30 years. With PACE financing, homeowners can be cash flow positive from day one because they see the financial benefits of solar for months before their first financing payment is due. Borrowers with lower credit scores often prefer PACE financing, as the lending is tied to the property rather than the individual's credit history.

In addition to offering financing to homeowners for solar panel installations, Renew Financial also finances energy efficiency upgrades for your home. This can include replacing your heating and cooling system, upgrading insulation, or new windows and doors, among other projects.

Financing amounts and terms

Renew Financial terms, including CaliforniaFIRST financing, range from 5 to 30 years. Property owners can borrow up to $250,000, up to 20 percent of their property value, through Renew Financial. (In the CaliforniaFIRST program, that's limited to 15 percent.)

Interest rates

Interest rates on Renew Financial financing options will vary based on the customer.

As mentioned above, homeowners have a few different sources of financing for their solar projects. EnergySage solar shoppers who finance their purchase will typically choose a loan from a traditional bank or a specialized lender like Renew Financial. The type of loan you choose depends on your priorities.

Solar is a relatively new technology, and some traditional banks may hesitate to provide financing for it. While this is less of an issue than it was a few years ago, the fact remains that a company like Renew Financial, which specializes in home energy financing, will be prepared with answers to any solar lending-related questions you might have.

Renew Financial's PACE financing can be particularly beneficial if you don't have good enough credit to access favorable loan options. While funding amounts and interest rates for traditional loans are determined by your credit, PACE financing amounts are determined by the tax capacity of your property (i.e., how much your property is worth).

Renew Financial's repayment structure can also be a benefit for property owners. PACE financing is repaid annually rather than monthly. By the time your first annual payment comes around, you'll have saved more in electricity costs than you owe as your payment, which means that you will always benefit from the net gains of your solar investment.

In some cases, PACE financing can make it more difficult to refinance your mortgage because of the way it is structured. If you're considering refinancing, be sure to talk with your bank before making a final decision on the loan you choose.

Many of the 450+ local installers who provide solar quotes on the EnergySage Marketplace use Renew Financial as their financing provider. If you're a California or Florida property owner interested in funding a solar installation with financing from Renew Financial, join EnergySage today and indicate Renew Financial as your preferred lender when registering your property.