Solar contract guide
Why did my solar loan payment go up?
Short answer
Many solar loans are built to recalculate around month 18 or 19. The low starting payment usually assumes you'll put a tax credit toward the balance by then. If that money isn't paid in, the lender recalculates the payment on the full remaining balance, and it often goes up.
How the recalculation works
Lenders gave homeowners a window, usually about 18 months, to file taxes, receive a solar tax credit, and pay that amount toward the loan. The starting payment was often calculated as if that payment would be made.
At the end of the window the lender re-amortizes the loan. That means it recalculates your monthly payment based on what you still owe, spread over the time left. If you paid down the balance, the payment can drop. If you didn't, the payment can rise, sometimes by a lot.
Why it catches people off guard
- The payment you were quoted at the kitchen table may have been the lower, after-credit payment.
- Not every homeowner qualifies for the full tax credit, or has enough tax liability to use it.
- Some loans start with a period of no payments, then recalculate again later.
What to check in your loan
- Find the section on prepayment or payment adjustment. Look for a month number, often 18 or 19.
- Find the two payment amounts: the starting payment and the payment if no prepayment is made.
- Compare that to what the salesperson told you your payment would be.
- If you weren't told your payment could go up, note that down. It matters in a review.
A quick note on tax credits
Federal rules on residential solar tax credits have changed recently, and whether you qualified depends on your own taxes. Talk to a tax professional about your situation. We look at the contract side: what you were promised and what you signed.