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Secured vs. unsecured loans
There’s a plethora of solar loan options available for you to take advantage of. In general, you bucket all these loans into two broad categories: secured solar loans and unsecured solar loans.
Secured solar loans require an asset–usually your home–as collateral for the money you borrow. Popular types of secured loans include:
- Home equity loan
- Home equity line of credit
- FHA loan
- Property Assessed Clean Energy (PACE) loans
Unsecured loans, on the other hand, allow you to borrow money to install your solar panels without putting a lien on your home. Because this is a riskier option for lenders, unsecured loans typically have higher interest rates.
Secured vs. unsecured loans summarized
| Type of loan | Secured Loans | Unsecured Loans |
| Interest rates | Lower interest rates | Higher interest rates |
| Lien required | Yes | No |
| Hidden Fees | No | Sometimes |
| Tax-deductible interest payments | Yes | No |
| Approval timeline | Can take weeks | Can take minutes |
| Savings potential | Generally higher | Generally lower |