What does your 1.99% solar loan actually cost?
Almost nobody lends at 1.99% for twenty years. When a solar quote offers it, the rate has been bought down — and you paid for the buy-down through a dealer fee folded into the amount you finance. It is typically 15–30% of the system price and it is almost never itemised. This works out what it was and what rate you are really paying.
The dealer fee is $7,500 — 30.00% of the cash price, folded into what you borrow rather than shown as a fee.
You are really paying 4.95%, not 1.99%. You receive a system worth $25,000 and repay a schedule built on $32,500.
| Option | Monthly | Total over 20 years |
|---|---|---|
| Their offer at 1.99% | $164 | $39,422 |
| Cash price borrowed at 7.50% | $201 | $48,336 |
The fee is worth paying here. Even carrying $7,500 of fee, the bought-down rate works out at 4.95% — cheaper than the 7.50% you would pay elsewhere, saving about $8,914 over the term. The advertised rate is still fiction, but the deal is not a bad one. Two things to hold on to: you now owe $7,500 more than the system is worth, which matters if you sell or repay early, and the comparison only holds if you actually keep the loan for the full 20 years.
How to find the two numbers you need
Ask the installer one question: “What is the cash price for this exact system?” Not the monthly payment, not the financed price — the number you would write a cheque for today. Then compare it to the amount the loan paperwork says you are borrowing. The gap is the fee.
If they will not separate the two, that is itself the answer. A reputable quote has no difficulty stating a cash price. If all you have is a monthly payment, switch the calculator to that mode — the principal can be worked backwards from the payment, the rate and the term.
Why the fee is not automatically a scam
This is where most coverage of solar loans goes wrong, so we will be precise. A dealer fee is a rate buy-down: you pay a lump sum, disguised as extra principal, to get a lower interest rate for a long time. Whether that is a good trade depends entirely on the term and on what you would otherwise pay to borrow.
Take a $25,000 system financed at $32,500 — a 30% fee — at 1.99%. Run against an unsecured personal loan at 7.5%:
| Term | Real rate you pay | Verdict against 7.5% |
|---|---|---|
| 10 years | 7.66% | Worse — the fee costs more than it saves |
| 15 years | 5.85% | Better |
| 20 years | 4.95% | Clearly better |
| 25 years | 4.40% | Clearly better |
The advertised 1.99% is fiction in every row. But the deal is only bad in the first one. The longer you amortise the inflated principal, the more a genuinely low rate is worth — which is exactly why these loans are sold with twenty and twenty-five year terms.
What the comparison still hides
Two things survive even when the buy-down wins on rate. You owe more than the system is worth from day one, so early repayment or selling the house crystallises the fee as a loss. And the fee inflates the price the payback calculation runs on: a system that pays back at $25,000 may not at $32,500. The financing can be a good deal and the purchase still a bad one.
What to do with the answer
- Ask for the cash price in writing, separately from any financing offer, before you discuss monthly payments.
- Get a rate quote from your own bank or credit union first. That number is what makes this calculator meaningful — without it you cannot tell a good buy-down from a bad one.
- Negotiate the cash price, not the payment. A lower monthly payment can mean a longer term, a bigger fee, or both.
- Check whether you should buy at all. The federal 30% credit no longer applies to a purchase — see what changed in 2026 — and in some states no option clears zero. Our state comparison shows where.
The assumptions behind every figure here are on the methodology page.