Financing with Clean Energy Credit Union: are they right for you?
Individual panel prices
Prices of DIY kits
Installed system prices
Solar panels for homes can get pricey these days. New installations can cost anywhere from $8,000 to $20,000 – sometimes more depending on the system size. While the federal tax credit and certain incentives can help alleviate financial stress, covering installation costs is a hefty transaction for most.
We have good news, though. There are numerous financing options available today, such as solar loans, which can help you transition to solar over the long term and reduce emissions without leaving a big dent in your wallet.
Solar loans are mostly offered by banks, but you don’t have to limit yourself to these traditional financial institutions. Credit unions, like Clean Energy Credit Union (CECU), are gaining popularity as solar loan providers due to their ability to offer competitive terms and rates. These financial companies operate very differently than banks and have unique customer requirements.
Let’s take a closer look at CECU and see if their solar loans are ideal for your home solar installation.
CECU is pioneering the clean energy movement as a not-for-profit financial company based in Englewood, Colorado. Established in 2017, the business offers financial loans for clean energy projects. CECU is a member-owned, federally chartered credit union and does not have any shareholders.
CECU’s edge over its competitors includes online financial services. In fact, the credit union does not have physical, brick-and-mortar offices. It relies heavily on web-based transactions and electronic communication with members in order to carry out its services.
CECU financial services and loans are only available to its members. While banks offer their services to anyone who is “bankable”, credit unions like CECU only provide their services to people who meet their membership requirements. If you don’t meet the financial institution’s requirements, you cannot become a member of the credit union.
The primary membership requirement for CECU involves being a part of or joining one of the company’s associated groups or organizations, which come with their own respective fees and requirements. You can also become a member of CECU if you are an employee of CECU, Our Climate, or 350 Colorado. You can bypass these membership requirements if one of your relatives is a member of CECU or any of its associated organizations.
If you don’t currently meet any of CECU’s membership requirements, you can easily become a member of Solar United Neighbors for free. Unfortunately, if you don’t want to join any of CECU’s associated groups or organizations you’ll have to consider alternative loan providers for your solar photovoltaic (PV) installation. Banks and third-party solar loan providers do not have membership requirements. You only have to meet the loan’s eligibility requirements to qualify for loans.
Solar electric loans are designed to help you pay for your solar PV installation over the long term. CECU offers the following types of unsecured solar loans: short-term balloon loans, long-term loans, and combination loans. Notably, the unsecured combination loan can cover the entire cost of the installation and allow you to apply your federal tax credit towards the installation without complicating your loan repayments.
In addition to meeting CECU’s membership requirements, the solar installation must be completed by a CECU Registered Dealer.
The short-term balloon loan allows you to apply your federal tax credit towards your solar installation as a “float” while waiting for your tax filing. For new solar systems installed after August 2022, the federal tax credit is 30% of your solar installation cost. This is advantageous for homeowners wanting to reduce the overall cost of their solar panels with their federal tax credit.
The annual percentage rate (APR) for all short-term balloon loans between $3,000 and $90,000 is 4.99%. You should closely adhere to the loan payment term of 12 or 18 months, as a late repayment will result in a 17.99% interest rate penalty for the entire loan amount.
The long-term loan can be used to pay up to 74% of the solar panel costs. Available loans range between $3,000 and $90,000. A 12-year term has a 4.99% APR, while a 15-year term has a 5.24% APR and a 20-year term has a 5.49% APR.
These loan amounts, terms, and APRs are in line with what banks and third-party lenders are offering. This long-term loan has a $25 processing fee and a $100-$350 flat filing fee depending on the requirements of the application.
Interestingly, you can reduce your APR for this affordable financing loan by a whopping 2.00% if you sign up for automatic loan payments. An additional 0.50% APR discount can be applied if you are a member of selected CECU programs. In our view, these discounts are quite lucrative.
A combination loan incorporates the short-term balloon loan and the long-term loan into a single loan package. These loans would be ongoing simultaneously so that your solar installation costs are fully covered without any breaks.
Repayment for the combination loan starts with making fixed monthly payments toward your short-term balloon loan during the first year. At 12 or 18 months, depending on the term of your short-term balloon loan, you should have fully paid off the short-term balloon loan. After that, you simply carry out the rest of the long-term loan.
The scope of CECU’s loans includes electric vehicles, electric-assist bicycles, green home improvement projects, and more. These loans are secured or unsecured, depending on the specific category. Like solar loans, you must be a member of the credit union and meet the qualification criteria during the loan application process.
CECU offers loans for all-electric vehicles, plug-in hybrid electric vehicles, and electric motorcycles. This includes both new and used vehicle purchases, as well as loan refinancing. All loan amounts range between $3,000 and $90,000. Available terms and APRs for new clean energy vehicles are four years with 2.29% APR, five years with 2.39% APR, and six years with 2.79% APR.
According to CECU, a vehicle is considered used if it is more than two years old but less than eight years old. You can choose between a four-year term with a 2.79% APR and a five-year term with a 2.89% APR for used clean energy vehicle loans. Loans for new and used electric motorcycles come with an additional 1.00% APR.
CECU offers loans for energy-efficient installations such as air conditioning systems, water heaters, home appliances, electric vehicle chargers, pool pumps, and insulation.
The below table covers information about CECU’s unsecured and secured green home improvement loans:
|Criteria||Unsecured Green Home Improvement Loan||Secured Green Home Improvement Loan|
|Loan amount||$1,000 to $35,000||$3,000 to $50,000|
|Terms||3 years, 5 years, or 10 years||3 years, 5 years, or 10 years|
|APRs||5.99% for 3 years, 6.99% for 5 years, or 7.99% for 10 years||3.25% for 3 years, 3.75% for 5 years, or 4.74% for 10 years|
|Fees||None||$100-$350 filing fee and $25 loan processing fee|
|APR discounts||2.00% for automatic loan payments, 0.5% if registered under an acknowledged CECU participating program||2.00% for automatic loan payments, 0.5% if registered under an acknowledged CECU participating program|
Like clean energy vehicle loans, you can reduce your APR by 2.00% when signing up for automatic payments. You can cut down your APR by an additional 0.50% if you are registered with a recognized CECU participating program. Take advantage of these discounts if you can when applying for unsecured green home improvement loans, as the APRs are unfavorable in our view.
Interested in other types of clean energy loans? CECU provides loans for geothermal systems and electric bicycle purchases. Like loans for solar electric systems, financing for geothermal heat pumps includes the geothermal tax credit, the installation cost, or both. The mechanism of the combination loan is very similar to the combination loan for solar electric systems.
Electric-assist bicycle loans are only for new purchases. You cannot apply this loan towards used electric bicycles or refinancing. These are uncommon loans and are worth checking out if you meet the financing requirements.
All applications for solar loans are facilitated online.
Here’s how to apply for a solar loan with CECU:
The application process is pretty straightforward. Unfortunately, the company does not have options for phone assistance, which is reserved for member, account, and card services. This can make the application process difficult if you encounter any issues with the process.
There are numerous alternatives available out there if you aren’t interested in working with a credit union for your solar loan, such as third-party lenders. There are no membership requirements associated with loans from these lenders because they are not credit unions. To benefit from solar loans from these companies, you must meet their eligibility requirements.
Mosaic is a financial company specializing in clean energy lending services. In our view, this business is one of the best alternatives for CECU loans because it has deep experience in offering residential solar loans and a wide network of solar contractors. Mosaic loan terms are available between 10 and 20 years, with 0.99% to 1.99% APR. Like CECU, the company offers a combination loan to make applying your solar tax credit towards your installation easier. A healthy credit score between 640 and 700+ is recommended for approval and access to low APRs.
LightStream Financial is another loan provider in the climate change arena with a focus on financing sustainability projects. The company offers loans between $5,000 and $100,000 with terms up to 20 years. Available APRs range between 4.99% and 16.99%. Because the APR range is wide, you should have a healthy credit score of 650-700+ to receive a low APR. If you cannot qualify for a reasonable APR for your solar loan with LightStream Financial, it would be a good idea to look around for other options. Anything more than 8.00% APR is considered to be high for solar loans.
Sunlight Financial offers unsecured loans for solar panel installations up to $100,000. Available terms range from three months to 25 years. These loans have more reasonable APRs than LightStream Financial at 0.00% to 6.99%. With a 650 credit score, you can qualify for loans up to $70,000. A 700+ credit score is required for loans up to $100,000. The recommended debt-to-income ratio for Sunlight Financial loans is 55% or lower.
Debt-to-income ratio is used to gauge your ability to make payments towards your loan by comparing your monthly earnings and your monthly debt payments. A healthy debt-to-income ratio is 43% or lower, though lenders typically set their own debt-to-income ratio requirements depending on the type of loan.
If you have equity on your home, you can use it as collateral for your home equity loan or HELOC to pay for your solar installation. Most home equity loans and HELOCs offer competitive interest rates, which is why many homeowners choose these loan options. The major risk with these types of loans is that if you default on your loan payments, your home could be foreclosed because you are using it as collateral.
A home equity loan features fixed interest rates, with terms ranging between five and 30+ years. This type of secured loan has predictable monthly payments, making the long-term payment process very smooth. On the other hand, a HELOC has variable interest rates depending on the amount you utilize in your line of credit. Keep in mind that your monthly loan payments may fluctuate and are less predictable than a home equity loan due to the variable interest rate.
|Clean Energy Credit Union||Banks and third-party lenders|
|Low APRs for solar and clean energy loans||Competitive loan products|
|Fairly new establishment with low asset base||Reliable history and track record|
|Offers APR discounts for solar loans||Must meet loan eligibility requirements|
|Requires membership with credit union||Many branches and online services|
|Online only (no physical branches)||Open to a wide network of contractors|
CECU’s clean energy loans are great financing options for homeowners due to their low APRs and reasonable terms. However, you must be a member of the credit union in order to apply for all of its clean energy loans.
Reviews surrounding CECU’s loans are mixed. Customers have reported delays in the approval and funding process. Moreover, some individuals have voiced concerns about not being able to reach CECU representatives when they need them. On the other hand, members are pleased with the company’s low minimum balance requirements and no monthly service fees for active accounts.
When it comes to CECU’s loan experience, the main thing to consider is the company’s online-only approach to its financial services. The credit union does not have any physical branches. Additionally, CECU’s phone support is lacking for new customers and is reserved mostly for member services, so getting help with your application would be difficult.
If you meet CECU’s membership requirements and are comfortable managing your loan online, these solar loans could be right for you.