Acquiring solar panels to switch to clean energy costs a heap of money, hence, the emergence of solar loans.
Sure, it’s easy to stick to loans with the lowest interests and down payments, but some of these deals are too good to be true. Behind these attractive financing options lie hidden charges that can impact your monthly payments, causing you thousands of dollars more in the long run.
Let us tell you about the hidden fees you should watch out for.
Dealer fees
Dealer fees are also known as origination fees, and it’s the money used by the dealer to pay for the processing expenses. They usually advertise it as free, but in reality, it takes up a percentage of the amount you loaned. A dealer fee is usually 1% to 5% of your total loan, but others can charge up to 30%.
This fee is alarming because companies don’t tell you about it. For example, if you need to loan $30,000, an additional $9,000 will be added for a 30% origination fee. For the usual 1% to 5%, the additional amount is $300 to $1,500, which is still quite substantial.
Prepayment penalty
This is an uncommon hidden charge but still worth knowing. They charge you with this if you manage to pay the entire loan before its term ends. For example, if your loan’s term is five years, and you complete the payment within three years, they will charge you a prepayment penalty. Sneaky, right? The amount is usually around 1% to 5% of the amount you loaned.
Late payment charge
Most financing companies charge you a late fee when you miss a repayment deadline (usually every month). The flat amount is $25 to $50, but others have a percentage-based charge of less than 5% of your principal loan.
Application fee
Loan providers charge you for their work to get your loan approved, even if unsuccessful. This is quite understandable; the fee is usually not more than $50.
What’s not okay is when a lender charges you more than a hundred dollars for the application. Watch out for and avoid such lenders.
