When evaluating a solar loan, important basic considerations are the interest rate, duration of the loan, and down payment amount. All else being equal, a lower interest rate results in lower monthly payments and less total interest paid over the duration of the loan. A longer loan duration also results in lower monthly payments but can increase the total interest paid. As for the down payment, paying more initially can reduce the interest rate and duration of the loan. Zero or low down payment loans exist for those who may not be able to pay a significant portion upfront.
Another important consideration is the type of solar loan. Loans can be either secured or unsecured. For secured loans, borrowers put up collateral that can be used as payment should the loan not be paid back. In the case of solar loans, the solar system itself or your home are commonly used as collateral.
An advantage of secured loans is that they typically offer more favorable terms to borrowers. They typically feature lower rates as they are less risky for lenders compared to unsecured loans. On the other hand, unsecured loans generally have higher rates but do not require collateral. These loans are riskier for lenders and are therefore usually offered to those with good credit.