Solar Loan vs Cash Calculator

Related Calculators

Table of contents

• How to use
• Common mistakes
• Definitions
• Methodology
• Limitations & assumptions
• Sources

Solar system cash price: The price you would pay for the solar installation before financing costs and before subtracting tax credits.

Down payment: Money paid up front, so it is not part of the loan balance.

Federal tax credit: The percent of the cash price used as a simple credit in this comparison. The calculator does not decide if you qualify.

Loan APR: The stated yearly loan rate before the calculator adds the dealer fee effect. APR usually helps compare loan cost because it can include costs beyond interest [1].

Dealer fee added to loan: An extra financing cost that raises the amount borrowed. It is separate from interest.

APR-like rate after dealer fee: The yearly rate that would create the same payment if the dealer fee were counted as part of the borrowing cost.

Extra loan cost compared with cash: Net loan cost after tax credit minus net cash cost after tax credit. Positive means the loan costs more.

Mistake: Entering a financed quote in Solar system cash price when that quote already includes a dealer fee.
Fix: Use the true cash price in Solar system cash price and put the fee percent in Dealer fee added to loan.

Mistake: Subtracting the Federal tax credit from Solar system cash price before calculating.
Fix: Enter the full cash price first, then let Federal tax credit apply the same percent to both cash and loan cases.

Mistake: Typing the monthly interest rate in Loan APR instead of the yearly APR.
Fix: Enter the stated yearly Loan APR from the loan offer, such as 6.99 for 6.99 percent.

Mistake: Using a Down payment greater than the Solar system cash price.
Fix: Keep Down payment from $0 up to the Solar system cash price.

Mistake: Reading Total interest paid over the loan as the full extra cost of financing.
Fix: Use Extra loan cost compared with cash for the full comparison because it includes interest and any Dealer fee added to loan balance.

• This is a financing comparison only. It does not include electric bill savings, solar production, utility rate changes, maintenance, insurance, roof work, or home resale value.
• The Federal tax credit input defaults to 0 because the US residential credit ended for property placed in service after 31 December 2025. A historical eligibility override remains available. The input is a simplified percent applied to the cash price in both cases. It is not tax advice and does not test eligibility.
• The loan math assumes a fixed APR, monthly payments, and the same payment for the whole Loan term.
• The Dealer fee added to loan is assumed to be financed in full. If your lender charges the fee in another way, the APR-like rate after dealer fee may differ.
• Other fees, prepayment choices, tax-credit paydowns, refinancing, late payments, and lender-specific rounding are not included.
• If Down payment equals Solar system cash price, there is no loan balance. The monthly payment is $0, and an APR-like rate after dealer fee is not needed.

How the cash side is calculated

The calculator first turns the entered Federal tax credit into dollars, then subtracts it from the Solar system cash price.

tax_credit_dollars = system_cost * federal_tax_credit_percent / 100

net_cash_cost_after_tax_credit = system_cost - tax_credit_dollars

How the loan side is calculated

The amount before fee is the cash price minus the Down payment. The dealer fee is added to that amount before the loan payment is calculated.

amount_before_fee = system_cost - down_payment

dealer_fee_added_to_loan = amount_before_fee * dealer_fee_percent / 100

loan_principal = amount_before_fee + dealer_fee_added_to_loan

The loan payment uses standard fixed-payment loan math. The Loan term is converted to monthly payments using 12 months per year.

monthly_rate = loan_apr_percent / 100 / 12

payment_count = loan_term_years * 12

monthly_payment_after_fee = loan_principal * monthly_rate / (1 - (1 + monthly_rate)^(-payment_count))

If the monthly rate is 0, the payment is calculated without the interest denominator.

monthly_payment_after_fee = loan_principal / payment_count

Then the calculator totals the scheduled loan payments, separates interest from the financed dealer fee, and subtracts the same tax credit dollars used in the cash case.

total_loan_payments = monthly_payment_after_fee * payment_count

total_interest_paid = total_loan_payments - loan_principal

net_loan_cost_after_tax_credit = down_payment + total_loan_payments - tax_credit_dollars

extra_loan_cost_vs_cash = net_loan_cost_after_tax_credit - net_cash_cost_after_tax_credit

APR-like rate after the dealer fee

The calculator finds the monthly rate that would create the same payment if the homeowner had borrowed only the amount before the dealer fee. It then converts that solved monthly rate to a yearly percent. This is APR-like because it counts the dealer fee as part of the loan cost, similar to how APR can include costs beyond the interest rate [1].

effective_apr_with_fee = solved_monthly_rate * 12 * 100

Mini-example

For an eligible historical installation with a $30,000 Solar system cash price, $5,000 Down payment, 30 percent Federal tax credit, 6.99 percent Loan APR, 20-year Loan term, and 15 percent Dealer fee added to loan, the amount before fee is $25,000 and the dealer fee is $3,750. The starting loan balance is $28,750. The monthly payment is about $222.72, total interest is about $24,703.94, and the tax credit used is $9,000. Net cash cost is $21,000. Net loan cost is about $49,453.94, so the Extra loan cost compared with cash is about $28,453.94. The APR-like rate after dealer fee is about 8.86 percent.