Reading your 20-year loan result
Why 20 years became the default solar loan term
Lenders and installers commonly quote 20-year terms because the resulting monthly payment tends to land close to what a typical household saves on its utility bill each month. On a $28,000 loan at 6.99% APR, that's about $217 a month, a figure that can sit near or even below common monthly savings of $125 to $200, depending on system size and local electricity rates. The CFPB's explainer on how loan amortization works covers why longer terms lower the payment this way.
The total cost of stretching to 20 years
That affordability comes at a price: total interest on the 20-year term runs about $24,060, compared to $17,273 on a 15-year term at the same rate, a difference of roughly $6,787. Whether that tradeoff is worth it depends on how much monthly breathing room matters to you versus minimizing total spend. The total cost of ownership calculator can help you weigh that extra interest against your full ownership picture.
How 25 years compares as an even longer option
Some lenders also offer a 25-year term, which lowers the payment slightly further but adds even more total interest. Run the 25-year loan calculator to see whether that additional stretch is worth the extra cost for your specific loan amount.
What "cash-flow neutral" actually means here
A loan is roughly cash-flow neutral when the monthly payment is close to or below your expected bill savings, meaning solar doesn't add a net cost to your monthly budget even while you're paying it off. That's a major reason 20-year terms are so widely used, since it lets homeowners go solar without feeling a real monthly pinch. The monthly payment vs bill savings comparison checks this directly for your specific numbers. Confirm the size before you borrow. The solar panel calculator in our System Sizing section can help you work out the panel count from your actual usage.
What to check before signing a 20-year loan
Confirm whether the loan has a prepayment penalty, since you may want the option to pay it off faster later if your finances improve. The early payoff savings calculator shows what accelerating payments on a 20-year loan could save in total interest. The CFPB's issue spotlight on solar financing covers general financing considerations worth reviewing before signing.