Going Solar Using Payment Options
Posted February 11, 2020 by EnerBank USA
As the solar panel market matures and government incentives continue their gradual phase-out, manufacturers, distributors, and installers need to find new ways to differentiate themselves in a competitive market.
The 30 percent federal tax credit started a step-down process on January 1, 2020, and over the next few years will eventually drop to zero. Now is the time to prepare for that day by utilizing other methods of facilitating payment for customers. Business may still be booming, but change is coming down the road, and smart solar company owners are lining up their business plans today.
Your customers likely already understand the advantages of going solar, but most are probably unaware of the payment options they have that go beyond the tax rebate approach. Familiarizing yourself with the choices available and establishing a good working relationship with a solid lender now can help your business flourish in the near-term as well as later on, when tax breaks are no longer a part of the equation.
Payment options can boost your sales
In many areas in the home improvement arena, offering payment options can grow your business by increasing leads and boosting close rates. Why? Because payment options help customers make the smartest use of their money. When a customer realizes they can get into a solar system today without dipping into their home equity or racking up high-interest debt on a credit card, they’re much more likely to say “yes” to you.
The key to using payment options to improve your sales process is to offer a choice to your customers, and then let them make the decision. They know their own financial situation, and can choose the loan that makes most sense for them. It’s best not to prejudge your customer based on outward cues like the size of their house or the cars they drive. Just offer a choice of payment options and let them determine which works best for them. Giving your customer that opportunity to choose can make the difference to closing the sale.
Some loans are a perfect match for solar
Solar payment options include same-as-cash loans, a combination of same-as-cash and a reduced interest loans, and loans that help a customer lower their payments through additional payments toward the principal. The duration of these loans will usually be from 12 to 20 years.
A Same-As-Cash Loan makes closing deals, upselling, and delighting your customers an absolute breeze. It’s a short-term lending solution with no monthly payment required and no interest if paid off within the “same-as-cash” period. It’s an ideal option for customers who prefer not to use their own money today, even though they may have the cash on hand.
Our Combo EZ Loan is an excellent way to offer your customers payment ease and flexibility as they consider adding renewable energy components to their home. Once the project is started, your customer will enjoy a no-payment, no-interest Same-As-Cash period while they await their tax incentives. When they get their tax rebate at the end of their same-as-cash period, they can make a nice lump-sum payment, then enjoy a low interest rate and longer payment terms, enabling them to end up with a monthly payment that’s at or below their former energy bill.
Triple Option Loans come with what’s called a re-amortization feature. This lets customers recalculate and reduce their monthly payments (on a particular schedule) after they’ve made a lump sum payment or additional principal payments — sometimes multiple times. This loan allows homeowners the opportunity to apply any additional money — expected bonuses, rebates or income tax refunds — to the loan balance and use the re-amortization periods to reduce monthly payments. This is especially important as the tax credit becomes phased out.
Different loan types offer certain advantages
It’s important to offer a choice of loan options, because, for example, a 12-year Combo EZ Loan may not be for everyone. Offering your customer other loan choices gives them flexibility in how they want to pay. Those who have most of the cash required for a solar project might be interested in a 24-month same-as-cash loan. That allows customers to keep their money and use it or invest it as they wish until the loan comes due. They can get the solar installation completed while spending nothing out of pocket, and manage their money on their own terms.
On the other hand, a customer with less financial flexibility may be more interested in a 20-year Combo EZ Loan, especially if a 12-year loan doesn’t lower the payment to be at or below their average utility bill.
Offer multiple options—stay neutral
While you may know the customer’s average utility bill, you won’t know their financial situation and whether they’re comfortable with a particular loan’s monthly payments. By offering multiple options, customers have more opportunities to say “yes” to you, rather than “no” or “not now.”
By offering a choice of payment options, you’ll close more sales. At EnerBank USA®, where we’re totally dedicated to the home improvement industry, we partner with hundreds of solar installers and distributors in the solar space. We follow the trends in the marketplace and understand your business. When you use our convenient Mobile Loan App, your customers can get approved in minutes, so you can get them in the installation queue right away, instead of waiting for them to line up a home equity line of credit or other funding, which can delay or cause you to lose the sale because the funding isn’t associated with you.
Leverage the power of payment options today, so you can not only increase your close rates and sales, but also be ready for the coming shift in the market that will accompany the phase-out of the federal tax credit. Staying ahead of the curve can put you in front of the competition and help you grow your business regardless of the market conditions.
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