Frequently Asked Questions
WILL I STILL HAVE AN ELECTRICITY BILL FROM MY UTILITY AFTER GOING SOLAR?
Yes, most of our customers will still pay a vastly reduced Electricity Bill to their utility in addition to their monthly loan payment to Loanpal. Typically, homeowners consume more electricity than the solar system generates, therefore, you will still owe your utility for that excess consumption and potentially for interconnection charges. However, if the solar system generates more electricity than you use, you may be eligible for credits from your utility provider.
HOW DOES THE FEDERAL RESIDENTIAL TAX CREDIT (ITC) WORK?
The Residential Tax Credit (sometimes called “ITC” or “RTC”) in 2020 is a 26% federal tax credit for solar systems on residential properties. As the owner of the solar energy system, you may be eligible to apply the credit as a dollar-for-dollar reduction in the federal income taxes that you owe in the year that you purchased your solar system. If the RTC granted for your solar system is greater than your tax liabilities in the year that you purchased your solar energy system, you may be able to apply the remaining RTC in the subsequent year. To determine your eligibility for any federal solar residential tax credit, you should make an independent assessment or consult with your tax advisor. Here’s an example:
The typical homeowner that goes solar with Loanpal pays about $30,000 for their solar installation. In this example, the 26% federal tax credit could reduce a borrower’s taxes by $7,800 – a nice bonus! Through December 31, 2022 homeowners qualify for a federal tax credit worth up to 26% of the total cost of the solar installation. To qualify for the solar federal tax credit, a borrower must meet all the following requirements:
- Own their home (renters are excluded)
- Their federal tax liability must be sufficient to qualify for the tax credit
- Own their solar system (financing the system with a loan from Loanpal meets this requirement)
WHAT’S THE DIFFERENCE BETWEEN A TAX CREDIT AND A TAX REBATE?
The ITC is a federal tax credit, not a rebate. Tax credits offset the balance of tax due to the government Therefore, you must have a tax appetite to be able to benefit from the tax credit. Please note, people who do not pay federal taxes may not be able to take full benefit of the tax credit This includes:
- Borrowers on fixed income
- Borrowers that are retired
- Borrowers that worked only part of the year
If a borrower does pay enough in federal taxes the year they finance (or purchase) a solar system, the credit can be applied to pay off the taxes due, Borrowers can claim the tax credit over two tax cycles if they don’t have the full tax liability in year 1. If the borrower already paid taxes by withholding them from their paycheck, the federal government will apply issue a tax refund for the delta.
HOW EXACTLY ARE MY LOAN PAYMENTS STRUCTURED?
The loan is structured to give you the benefit of using the 26% Federal Residential Tax Credit to pay down your loan, so that your initial monthly payments are kept low. After month 18, your loan will re-amortize, and your new monthly payment will be adjusted so your loan is fully repaid by the end of your term. Most of our loans* follow the following 3 scenarios after the month 18 is passed:
A. If you pay down your loan 26% by month 18, your monthly payment will remain approximately the same throughout the life of your loan.
B. If you do not pay down your loan 26% by month 18, your new monthly payment will be higher than your initial monthly payment.
C. If you pay down your loan by more than 26% by month 18, your new monthly payment will be less than your initial monthly payment.
* Please note our Flexpay loans are structured so that borrowers can pay as little as just interest for the first 18 months. For questions about these loan payments, please reference your Loan Documents or call our customer support: 1.844.LOANPAL
WHEN IS MY FIRST PAYMENT DUE?
Your first payment date is indicated in your Closing Certificate. To have us resend your Closing Certificate, please email us at firstname.lastname@example.org. Or, you can review all your loan details on your Portal.
HOW DO I MAKE A PAYMENT ON MY LOAN?
If you are paying by check, please include your Loan Agreement Number on your check and mail it to: Loanpal, PO BOX 4387, Portland, OR 97208.
If you have set up your payments to be made by Autopay, your account will be withdrawn monthly for the exact amount of your solar loan payment. To view your current Autopay settings, please visit the online Portal from the loanpal.com homepage.
HOW DO I ENROLL IN AUTOPAY?
To enroll in ACH, please enter your Portal and follow the instructions on the ACH tab.
WHEN IS MY TARGET BALANCE DATE AND WHAT IS MY TARGET BALANCE?
To view your Target Balance Date and Target Balance, please log in to your Portal from the loanpal.com homepage.
HOW DO I PAY BACK THE FEDERAL INVESTMENT TAX CREDIT INTO MY LOAN?
You may make any prepayment, including your residential tax credit prepayment, by either sending a check or logging into your personal payment portal and making a one-time payment via ACH.
If you are paying by check, please include your Loan Agreement Number on your check and mail it to Loanpal, PO BOX 4387, Portland, OR 97208.
WILL I BE CHARGED ANY PREPAYMENT PENALTY?
No, Loanpal does not assess any fee or penalty for prepayments.
WHEN DOES INTEREST BEGIN TO ACCRUE ON MY LOAN?
For most of our loans, interest begins accruing from the date that Loanpal funds your loan. Please reference your loan documents for specific dates.
ONCE APPROVED FOR CREDIT, HOW LONG IS IT VALID?
Our credit approval is valid for 180 days from when we initially run your credit. Your loan must fund within 180 days of running your credit, or we will simply need to revalidate your credit.
WHAT IS A UCC-1 FINANCING STATEMENT AND IS IT A LIEN ON MY HOME?
We secure your Solar Loan through a lien on the solar equipment itself by filing a UCC-1, or Uniform Commercial Code Financing Statement, and county fixture filing. The filings are not a lien against your home, so we do not hold any formal position in your home (first, second, or otherwise). You will, however, find a UCC-1 fixture filing on the title of your property. We file UCC-1 and county fixture filings to protect our rights as the financier of the system. If for whatever reason your mortgage on the real property forecloses on your home, the UCC-1 filing protects our security interest in the system, while preventing your mortgage lender from taking ownership of it.
If you have any questions about the UCC-1 or county fixture filings, please contact us at email@example.com
I WANT TO SELL MY HOME. WHAT DO I DO ABOUT MY LOANPAL LOAN?
You have two options:
In the vast majority of cases, homeowners choose to pay off the remaining balance of the Loanpal loan through the sale of their home.
However, if the new homeowner wishes to assume the loan, he/she must apply to qualify for a Loanpal loan. If the new homeowner is approved, then he/she assumes full responsibility of the loan. If he/she is not approved, then you must pay off the remaining balance of the Loanpal loan.
WHAT ARE THE BENEFITS TO ROLLING MY SOLAR LOAN INTO MY MORTGAGE?
Through our Mortgage Division, we can offer you very competitive interest rates on your mortgage. Because mortgage interest is tax deductible, most of our customers can see significant savings by refinancing and paying off their solar loans with their mortgage. To understand the benefits of rolling your solar loan into your mortgage, please call one of our specialists at: 1-844-562-6725 or visit us at www.loanpal.com
WHAT HAPPENS TO THE UCC-1 DURING A REFINANCE?
We may agree to lift our UCC-1 and county fixture filing on the Solar Equipment for a limited period provided we will be able to refile upon closing of the mortgage refinancing.