Is Enerbank a legitimate company to provide your solar or home improvement loan?
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Chances are you’re here doing your due diligence to make sure you’re not going to run into trouble down the road after signing off on an Enerbank loan to finance your new shiny solar system.
The good news is we’ve got you covered, because we’ve completed a full sweep of Better Business Bureau reviews to gauge whether or not Enerbank is a legit company to do business with.
In this article, we first provide an overview of customer reviews and complaints of Enerbank. Then, we provide an overview of the company, detailing their market strategy and financials. Finally, we describe how two of their popular loans work and compare them to a home equity line of credit as a means to pay for your home improvement project. Let’s get to it!
According to the Better Business Bureau, Enerbank is an A+ company to do business with.
They’ve been rated by the organization since 2004. After scouring over 250 of their reviews, most of the comments are quite positive and center around customers’ ability to get a zero-interest loan easily:
However, the recurring negative complaints the company has relate to its lack of online payment balance visibility and lacking customer support. Here is a sampling of what we found:
Clearly, Enerbank needs to upgrade its payment system online in order to provide account holders with a real-time balance overview. These types of payment complaints have been made since 2017.
There is also an opportunity for this lender to improve its customer relations and phone support.
Enerbank Headquarters at 1245 E Brickyard Rd, Salt Lake City Utah. Image Credit: Google Earth
Pictured above is Enerbank’s corporate headquarters. We imagine that when employees are not busy handling consumer complaints like the ones above, they are taking a dip in the nearby pool and retreating to their conveniently-located condos.
At the very least, you can be assured that this company has an actual physical presence.
Enerbank USA is a national consumer lender that was founded in 2001, in Salt Lake City, Utah.
They primarily offer loans for home improvement projects, like home solar panels. Enerbank is FDIC-insured and offers a streamlined loan approval and application process through its website, enerbank.com.
What makes them different from most other banks is their niche focus on home improvement loans and their goal to help contractors increase sales. They have developed a robust and expanding network of franchisors and major retailers of home improvement products.
According to Dun and Bradstreet, as of late 2020, Enerbank generates over $150 million in sales annually, employs over 30 employees at its corporate office, and is a subsidiary of CMS Energy Corporation, a multi-billion dollar Fortune 1000 company.
Enerbank’s loan products are designed to offer flexibility and choice to homeowners engaged with independent home improvement contractors.
Due to COVID-19, Enerbank has also focused more on relationships with strategic business partners like Leap. Leap makes project quoting tools for independent home improvement contractors to use all over the United States.
To entice homeowners, Enerbank's loans are designed to provide flexible payment options and low to zero-interest loan rates. Though, there are some important details to be aware of before digitally signing on the dotted line.
Below is more information about two of their most popular loan options: “Same-As-Cash Loan” and "Triple Option Loan".
One of Enerbank’s most popular offers is called a “Same-As-Cash Loan”. It’s offered at 0% interest at a loan term of 12 months.
That can make a lot of sense for people who are diligent about tracking their monthly payments, since you’re essentially able to use Enerbank’s money upfront and pay the balance off over the course of a year with no interest. That’s all well and good, unless you miss a payment. If you do, you’re not going to be able to enjoy that zero interest rate anymore.
Perhaps that’s why Enerbank hasn’t been in a hurry to upgrade their online payment portal with clear visibility into how much current loan balances are and when payment is due.
A sinister perspective might be that Enerbank could be banking on the fact that not everyone is diligent enough to track their loan amounts themselves. People may unwittingly miss their balance due dates and begin to grapple with accrued interest.
However, if the loan timeframe is relatively short for zero interest, and the principal amount can be paid off at regular intervals, their “Same-As-Cash” zero interest offering might be worthy of your careful consideration.
In the middle of 2019, Enerbank launched a specialized loan product for contractors to pitch, called a “Triple Option Loan”.
It’s targeted at homeowners installing solar who expect to receive the 26% federal solar tax credit, local rebates, or other incentives such as solar renewable energy certificates (SRECs) which they can monetize.
These loans have a 12 to 18 month no-payment period. If a customer pays off the balance due before the term length expires, all accrued interest is eliminated. After the 12 or 18 months is up, the balance due is re-amortized annually for the next three years.
The pitch usually goes something like this:
Solar contractor: “Hey homeowner Lucille, you’re going to get a 6 kilowatt solar system installed on your home, doesn’t that sound exciting?”
Lucille: “Yes, I love solar!”
Solar contractor: “Great, me too. It’ll cost $22,000, but it’ll pay for itself in 7 years because you’ll get a $5,720 federal solar tax credit, $1,200 annually for your SRECs, $200 in monthly electric bill savings, and your system will last at least 25 years!”
Lucille: “Wow. That sounds nice, but I don’t have that kind of money sitting around.”
Solar contractor: “It’s all good Lucille, we’ve partnered up with this loan provider, called Enerbank. If you apply the money you’ll get from the government over the first few years, it’s basically like having cash sitting under your couch that you can use for this.”
Lucille: (skeptically looks up “Enerbank” on Google)
Solar contractor: “Check it. When you apply your $5,720 tax credit and $1,200 SRECs to your loan balance before 18 months are up, you won’t be charged any interest on that amount.
That means you’ll have a balance of $15,080 left to pay off, but you can also apply your annual SREC payments to the loan over the next 3 years without penalty because the loan is reset with the amount you actually owe each year.
When you apply your SRECs to your loan each year, you’ll pay off your loan by 2024 and your monthly payment is gonna be less than you were paying for electricity. Sweet, huh?”
Lucille: I guess? Yes? Ok!
Indeed, this loan product is working out pretty well for solar contractors, who are reporting 30% increases in financed system volume using Enerbank’s Triple Option Loan.
However, you have to be careful not to miss your payments, and be smart about applying the tax credit and other incentives to your loan balance to ensure you’re getting the same terms you thought you were supposed to when you signed up for the loan in the first place.
If you miss a payment or fail to apply your tax credit and/or your solar incentives to the loan balance, this "Triple Option Loan” will still reset annually - but you’ll wind up needing to pay way more in interest. That's because each time the loan is reamortized, you pay off your interest balance with a higher percentage of your monthly payment than your principal.
Moreover, your interest may accrue daily and this can cost you a lot of money you weren’t planning on allocating to your home improvement project.
If we were your best friend, neighbor, parent, or whoever you’re currently inspired by, we’d suggest you strongly consider applying for a home equity line of credit (HELOC) for your home improvement project.
The application process, while not as fast as an on-the-spot approval your installer or home improvement contractor might prefer, is relatively straightforward.
Also, your loan repayment terms will be more clear, and at a low rate which can be fixed to the length of the loan.
With interest rates hovering at historic lows in the 2% range, there’s no reason to not explore a longer term length from your local bank, which allows you to be free of unexpected ballooning interest or reamortization which can compound the amount of money you’ll need to pay over the life of the loan.
While most people are quite satisfied with Enerbank as their low-interest home improvement loan provider, others complain about lack of transparency into their loan balances due.
If you aren’t good with paperwork, managing money proactively, or don’t like the prospects of having to make a phone call to an Enerbank customer service representative to check your balance and payment progress, we suggest looking elsewhere for home improvement financing.
However, if your term length is relatively short and you are confident you can repay the balance in full before the loan expires, free money is free money. You might as well explore a zero-interest rate to make completing your home improvement project less of a challenge.
That said, since their online portal leaves something to be desired and their customer support might be lacking, we’d be hesitant to move forward enthusiastically with one of their longer-term home improvement loans, such as the Triple Option reamortizing solar loan. Your credit score is at risk here, and so is your peace of mind.
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