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Hidden Fees: What’s in Your Solar Loan?

It’s no secret that switching to solar energy is nothing short of an investment. After all, solar projects can cost literally tens of thousands of dollars, depending on the size. Because these projects are a large investment, many customers seek financing to cover the cost. Some financing companies boast extremely low interest rates with notably low payments as well. However, what these companies neglect to disclose is a fine-print catch called “dealer fees.”

What Are Dealer Fees?


Dealer fees in solar loans are a percentage of the loan added to the total principal of the loan. Generally, dealer fees are anywhere from 15-25% of the total project cost, which causes you to pay literally thousands of dollars more. 


Dealer fees are used to reduce the Annual Percentage Rate (APR) of your loan, which also results in lower monthly payments. With a lower APR, these companies need a way to make their profit, so they toss in dealer fees that get them more money than a standard APR would. This is similar to paying points on a mortgage, which were very popular in the early 2000s before the economic crisis of 2008. In addition, lower monthly payments lead to a longer payment period, which ultimately results in a larger total cost to you.

For example, if you have a $30,000 loan with 25% in dealer fees to get a 2% interest rate, you will end up paying an extra $7,500 to the financing company. Keep in mind this will likely be over the course of a longer payment period, meaning the financial burden of the extra $7,500 will be a long-term problem.

Companies that user dealer fees try to justify their prices to potential customers by saying “it’s the only way to finance solar,” “it’s an industry norm,” or even by saying it “makes the solar financing process simpler.” None of these statements are true. Loans with dealer fees may have a much shorter application than an honest loan, but taking a little more time to save literally thousands of dollars is a worthy trade-off.

How To Recognize Hidden Fees

You can avoid getting tricked into signing a loan with dealer fees if you simply know how to spot one. First, remember the current state of our economy. Right now, interest rates are extremely high and are likely not going down anytime soon. The world’s central banks have raised interest rates this year at the fastest pace in decades (1). Thus, if a company is offering you a low interest rate (for example, a 2% interest rate) when just about every industry is experiencing higher interest rates right now, there is likely a catch. Simply trust your gut. Like the old saying goes, if something seems too good to be true, it probably is.

At Kasselman Solar, we assign a Project Manager to your installation and work with independent credit unions, banks, and private lenders so our customers can get the best deal possible for their solar. With us, you can rest assured we have your best interest at the top of our priority list.