Hidden Dealer Fees Behind "Low APR" Solar Loans
We can get you financed at just 1.99% APR, which is way better than any bank. Cash or loan, the price is the same.
What's actually true
Low-rate solar loans are usually paid for by a dealer fee the lender charges the installer, which is added to your price. The CFPB says these fees typically run 10% to 30% of the cash price and sometimes exceed 50%.
Most solar loans advertised at 1% to 4% APR are not cheap money. The lender charges the installer a “dealer fee” to buy down the rate, and the installer adds that fee to your price. You pay it, but it never shows up in the APR. The CFPB’s 2024 Issue Spotlight found these fees typically run 10% to 30% of the cash price, and sometimes more than 50%.
Why salespeople do it
A low APR is easy to sell and compare against a credit card. The fee is invisible unless you know to ask for a cash price. Price data backs this up: Lawrence Berkeley National Laboratory found that in 2025 the median loan-financed home system cost about $4.50 per watt, versus about $3.00 per watt for known cash purchases, about 50% more (LBNL 2026 data update).
The Minnesota Attorney General sued four solar lenders (GoodLeap, Sunlight, Mosaic and Dividend) in March 2024, alleging about $35 million in hidden dealer fees on roughly 5,000 loans. As of October 2026 we could not confirm a resolution.
A worked example
This mirrors the CFPB’s own example. The system’s cash price is $30,000. The installer adds a $9,000 fee (30%) and finances $39,000 at 1.99% for 25 years.
| Dealer-fee loan | Cash | |
|---|---|---|
| Amount you owe | $39,000 | $30,000 |
| Advertised APR | 1.99% | n/a |
| Monthly payment | about $165 | n/a |
| Real rate on the $30,000 system, held 25 years | about 4.4% | n/a |
| Real rate if paid off after 8 years | about 6.1% | n/a |
The CFPB notes that most solar loans are paid off in 7 to 9 years, often when people sell or refinance. The earlier you pay off, the more the upfront fee costs you per year.
To be fair: a dealer-fee loan isn’t automatically worse than every alternative. If your other choice is a 9% unsecured loan, a 1.99% loan with a moderate fee might still win. The problem is not knowing the fee, so you can’t compare. A cash buyer simply saves the $9,000.
How it shows up in a quote or contract
- No cash price anywhere, or “price may vary by financing option” in small print
- A “contract price” or “amount financed” that is far above about $3.00 per watt
- A Truth in Lending box showing a low APR, with the fee folded into the “amount financed”
- Multiple loan options with different rates and different total prices for the same system
Questions to ask
- “What is the cash price for this exact system, with the same equipment?”
- “What dealer fee or platform fee does the lender charge on this loan?”
- “Does the price change if I bring my own financing?”
- “What is the total of all payments if I keep this loan the full term? If I pay it off in year 8?”
If the cash price is lower than the loan amount, the difference is the fee.
What to do next
Plug the cash price and loan terms into the dealer fee calculator and the solar loan calculator. Compare against a home equity line or credit union loan. As of October 2026, Bankrate’s national average HELOC rate was about 7.34%. Our solar loan dealer fees guide and financing options guide go deeper. Use compare quotes to see quotes side by side in price per watt.
Bottom line: Never judge a solar loan by its APR. Judge it by the cash price, the loan amount and the total you’ll pay.
Where to report it
- CFPB: consumerfinance.gov/complaint
- Your state attorney general’s consumer protection office
- FTC: reportfraud.ftc.gov
Related red flags
Quotes That Show Only a Monthly Payment
A monthly payment hides the total price, the system size, the price per watt and any dealer fee built into the loan. Two quotes with similar payments can differ by thousands of dollars in total cost.
The Month-18 Payment Jump (Reamortization)
The low payment is often calculated as if you will pay down about 30% of the loan early. If you don't, the loan re-amortizes and the payment can jump by 40% or more. Homeowners who buy in 2026 get no federal credit to make that paydown.
Inflated 25-Year "Lifetime Savings" Numbers
Lifetime savings headlines usually add up 25 years of future dollars as if they were worth the same as today's, assume you stay the whole time, and sometimes count tax credits or inflated rate increases as savings. The real value is usually much smaller and depends on what else you could do with the money.
"This Price Is Only Good Today"
Solar equipment and labor costs don't change overnight. A discount that disappears tomorrow was almost always built into a high starting price, and it exists to stop you from comparing quotes.
Loan Payments That Start Before the System Runs
Many solar loans start when the lender pays the installer, which can be at installation, long before the utility grants Permission to Operate. During that gap, you pay both the loan and your full utility bill.