Does financing solar only make sense when you can’t afford it?
How does financing a solar project in Washington State affect its financial performance?
Knowing the ins and outs of borrowing is important when considering the economic value of a solar power system.
When it comes to buying a solar power system, there are two good, basic reasons people may want to borrow:
1. A property owner may not have the cash available.
2. Financing solar projects can make sense when there is anticipated financial gain and additional cash flow to cover loan payments.
Question: Would someone with plenty of cash want to take out a loan for their new solar power system?
Answer: Quite possibly, because:
1. Borrowing money leaves capital available for other purposes. A buyer may have another investment in mind that has a greater return than the interest rate she might pay for a solar loan. Keeping most of the cash available for future projects will preserve the opportunity value of her money.
2. A borrower can expect a higher return on each dollar invested in exchange for making a monthly loan payment.
Here’s how this can work:
• Borrowing money for a project with a good return creates a leveraged investment, where a small up- front cash investment (the down payment) produces a much higher rate of return per dollar than paying for the whole project cost up front.
• Buying a home with a modest down payment is a classic example of a leveraged investment.
Financing a Solar Project–We can help
Low interest financing is a available to you. InvestSolar can help find the right banker that will make financing easy.