Quick Read
Dealer fees are a percentage of a projects cost added onto the initial loan amount to lower the loans APR. They can be as high as 25% of a projects’ cost. A few hours worth of time to apply for a legitimate loan can save literally thousands of dollars.

Solar Loan Dealer Fees

Installing solar panels on your home is typically a five-figure purchase, so a majority of people take on financing to pay for it.

It’s often easiest to get financing directly from your solar installer. The installer will give you a solar installation proposal with a financed price, and you won’t have to deal with your bank or any other lending institution. Simple, right?

While this is undoubtedly an easy way to go, it comes with one big pitfall: it’s often hard to know what this will cost you. This is because of dealer fees. The dealer fee is a financing fee charged not to the customer, but to the solar installer.

The solar installer will pass this onto the customer, so in practical terms it’s an additional fee that you’re paying directly to the lender – similar to an origination fee with other types of loans.

How does a solar loan work?

If you work with a solar installer and tell them that you need financing, they’ll reach out to a financing partner they work with and help you secure the loan.

Once you’re qualified for financing, your home solar proposal will contain details of the system they plan to install on your home. Instead of a bottom line price, you will see a monthly loan amount that you will pay every month until the loan principal is paid off. (Often that will be 20 years.)

There will be some financing-related paperwork you will receive and sign before executing the final contract, but by going through the solar installer, you avoid the extra step of finding a financing company and going through the loan application yourself. This is a lot like getting an auto loan through a dealership.

What is a dealer fee with a solar loan?

If you’ve ever gotten a mortgage, you might be familiar with an origination fee. This is a fee that the lender charges you for executing the loan. It’s basically a piece of revenue that the lender bakes into every loan.

A dealer fee is similar, except that the lender charges it to the solar installer. Remember that with a solar loan you obtain through an installer, it’s the installer who works with the lender. Because of this, the fee is charged to the installer.

How much are dealer fees?

Solar customers often have no idea how much of a dealer fee they are being charged. In fact, some lenders have been known to discourage solar installers from discussing dealer fees at all.

However, according to some sources, dealer fees can be more than 30%.

This is staggeringly high: imagine buying a $30,000 car, but the financing company adds $10,000 to the sticker price on top of that.

That doesn’t even include the interest on top of the principal. This means you can easily pay 50% more for your solar panels simply because you chose to finance your system from a solar loan company.

How to Avoid Dealer Fees

Financiers that use dealer fees rationalize these enormous fees to customers with more dishonesty, often stating that dealer fees are “the only way to finance solar,’ “it’s an industry norm,” or that it “makes the financing process simpler.” None of these statements are true. When in reality working with either private lenders or a credit union can take as little as 2-3 hours to get approval for a solar loan. 

Don’t be fooled by these solar lenders telling you it’s their way or the highway. As a customer you should be informed on what works best for your individual situation. Dealer fee loans are as simple as an online application done within minutes, while credit unions typically require income documentation, which a couple of hours longer. Sure, a quick application may be more convenient, but we can all agree that taking a little more time to avoid paying thousands of dollars is worth it.

At GraySquare Solar, you are assigned a Solar Specialist that walks you through the financial process, keeping it as simple as possible. We work with independent credit unions, banks, and private lenders so that our customers can be comfortable in the investment that is their solar system.


Contact us: