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How does the solar loan work?
- Sunlight offers a single solar loan with a one-time re-amortization. This loan gives customers the option to use their federal tax credit to maintain a low monthly payment.
Example: Jennifer signs a loan agreement for solar and her system gets installed. Her first payment occurs 60 days after her system is installed. Assuming she has enough tax liability, she can file for the federal tax credit the following year. Her re-amortization will happen 18 months after the system is installed.
• If she makes all of her monthly payments and also voluntarily pays 26% of the loan amount by the 18th month, her monthly payment will stay the same
• If she makes all of her monthly payments and also voluntarily pays more than 26% of the loan by the 18th month, her monthly payment will adjust down
• If she makes all of her monthly payments and also voluntarily pays less than 26% of the loan by the 18th month, her monthly payment will adjust up
If you have a specific dollar amount you would like to apply to the loan within the first 18 months, the re-amortized payment can be estimated using the payment calculator in this consumer portal.
- What if I pay more than my minimum monthly payment during the first 18 months?
- Any amount you pay in excess of your monthly payment in the first 18th months will be factored into your re-amortization. If you pay more than your monthly payment at this point, it will not change your minimum monthly payment until the re-amortization on the 18th month.
- Am I paying interest in the first 18th months?
- Yes, you begin accruing interest daily once your loan is funded. Paying more than your monthly payments in the first 18 months will not reduce the interest that is accrued. Your monthly payments will be applied first to any accrued interest, then toward your principal.
- What is the charge for a late payment?
- If you make a late payment, you will be charged the higher of either 5% of your monthly payment or $25. If your loan is with Corning Federal Credit Union, you will be charged a $20 late fee. Paying by automated payments through the Automated Clearing House (ACH) makes sure you never have a late payment and never hurt your credit score due to a late payment.
- What if I do not have enough tax liability to claim the full 26% tax credit in the first year?
- If you do not claim the full 26% tax credit in the first year, you have the option to roll over the remaining credit into future years. The ability to roll over the tax credit is only available as long as the tax credit is in place; at this time, it is scheduled to be available until the end of 2021. Please check in with a tax advisor if you have any specific questions about how to use the tax credit or any available state/local incentives.
- Are there any other parts of my solar project that may be eligible for the federal tax credit?
- We are not tax professionals, so if you have additional questions about the tax credit, please check in with your tax advisor.
- What is the process for transferring the loan to a new homeowner?
- 1. The borrower should inform the lender that the borrower is considering transferring the solar loan to the homebuyer.
2. The homebuyer will be asked to complete a credit application. To be able to transfer the loan, the homebuyer will need to meet the lender’s credit requirements.
3. If the homebuyer meets the credit requirements, the homebuyer will need to sign a loan agreement in the outstanding loan amount.
- Is there a lien on my home?
- No, there is no lien on the home. Instead, you give the lender a security interest in the solar system. The lender will typically file a UCC-1 and a fixture filing, as applicable, to create a lien on the solar system.
- What are the numbers in the Truth in Lending Disclosure page?
- The “Truth in Lending Disclosure” is a federally required form that provides transparency to all borrowers on the financing charges involved in their loan. Since our loan has a re-amortization, we are disclosing to you the “worst case scenario” finance charges assuming you do not make a 26% voluntary payment within the first 18th months of the loan.
- What is a re-amortization?
- This is the finance term that refers to the point in time when a lender recalculates the borrower’s monthly payment based on how much of the loan the borrower has paid up until that point.
- What if I want to make a payment above my minimum monthly payment after the 18th month?
- Any amount you pay in excess of your monthly payment in the first 18th months will be factored into your re-amortization. If you pay more than your monthly payment at this point, it will not change your minimum monthly payment until the re-amortization on the 18th month.
- Can I pre-pay the loan off early?
- Yes! You can prepay the loan in full or in part at any time. Simply call your lender to find out the payoff balance. Remember, the earlier you pay it off, the less interest you will have accrued on the loan. And there are no prepayment penalties!
- What is a tax credit?
- The solar investment tax credit is a federal investment tax credit that can be claimed on federal income taxes for 26% of the cost of a solar photovoltaic (PV) system. Please consult your tax advisor for any additional guidance.
- Can I use the tax credit on an Investment Property?
- Currently, the federal tax credit is only available for residential homes. An investment property where the owner does not live on site would not be considered eligible.
- What happens if I sell my home?
- When you sell your home, you have two options. The most common choice is to pay off the remaining balance on the loan and sell the home with the added value of a paid-off solar system. The second option is to ask the homebuyer to apply to take over the loan payments where you left off – this is called transferring the loan. You can only do this if homebuyer meets all of the lender’s credit criteria to take over the balance of the loan.
- What happens if I need to re-finance my mortgage?
- When you re-finance your mortgage you will need to contact your lender first to notify them of your plan. We recommend reaching out to your lender at least 2 weeks ahead of time. The lender can then assist you in filing paperwork called a subordination. This subordination document will make it clear that the UCC-1 security interest on the solar system is subordinate to your mortgage. This will help make sure that you do not run into any complications during your re-finance.
- What is the security interest on the system (UCC-1 Filing)?
- As part of the loan agreement, the lender will file security interest paperwork with the county that states that the lender has a security interest in the solar equipment. This security interest is known as a UCC-1 filing. With this arrangement, there is no lien on your home or property, instead the solar system itself serves as the collateral for the loan.
- Why do I need to sign a credit union member form?
- Sunlight works with several lenders, some of which are federal credit unions. Credit unions offer credit to their members only. If your lender is a credit union, you will be asked to complete a credit union member form with your loan document package. The great thing is there are no monthly or annual fees for being a member. Your membership will begin only once your system is installed and your loan is funded. The form is there to help confirm your identity, which is a federal requirement that protects against fraud when setting up accounts with financial institutions.
