Reading your secured vs unsecured result
Why secured loans offer lower rates
A secured loan gives the lender collateral to recover if payments stop, which lowers their risk and lets them offer a better rate in return. That gap typically runs 1.5 to 3 percentage points. On a $28,000 loan over 20 years, moving from a 6.49% secured rate to an 8.99% unsecured rate costs about $10,355 more in total interest. The CFPB's HELOC explanation covers how a secured product like this typically works.
What "secured" actually means for a solar loan
Most secured solar financing runs through a home equity loan or HELOC, meaning your home itself backs the loan. If payments stop, the lender's recovery options include the same processes as any other loan secured by real estate. The HELOC for solar calculator and home equity loan vs solar loan comparison both dig deeper into how that structure works.
Why many homeowners still choose unsecured anyway
An unsecured loan skips the appraisal, title search, and closing costs that often come with home equity products, and it closes faster in most cases. For homeowners who'd rather not tie their solar system to their home's equity, or who don't have enough equity built up yet, the higher rate is often viewed as a fair tradeoff for that simplicity. The cash vs loan savings comparison can help you weigh a third option, cash, against either financed path.
How your credit score affects both options
A strong credit score narrows the gap between secured and unsecured rates, since unsecured lenders lean more heavily on credit to set pricing. Check the credit score impact on rate estimator to see where your score might land you on either path. The CFPB's credit reports and scores resource can help you confirm exactly where you stand first.
Checking your available equity first
A secured loan is only an option if you have enough home equity to support it, typically capped at a percentage of your home's value minus what you still owe. The loan to value calculator shows whether a secured loan is realistically available to you before you spend time comparing rates. The small business solar loan calculator is worth checking too if the system is for a business rather than a home.