I looked at a dozen companies for solar and finally made my decision after getting the last two in a bidding war. This alone saved me $10k by shopping around and not going with the first quote. ALWAYS get a 2nd, 3rd, 4th, and 5th opinion when making a large purchase.
At that point I was ready to buy a system that would cost around $14,971 before financing and interest payments. The standard option that most companies offered would be a ~4.99% loan with no prepayment penalties BUT there is a 15% origination fee if you choose to finance. They also require you to immediately pay them the 30% tax incentive and any state tax incentive back after you file next year's taxes otherwise the loan re-amortizes and monthly payments go up.
I would basically end up with an monthly (reduced) electric bill payment to the solar finance company for 20 years. That is how they like to sell their offering to 99% of buyers. They say "You are already paying $100/mo electric bill. Buy solar and just pay $80/mo and after 20 years you pay nothing but a connection fee of $10 per month"
I decided to look at my options and they were as follows:
- Solar financing with $2k+ origination fee wrapped into the total amount due
- Cash
- Personal loan or HELOC around 5.99%
- Apply for a bunch of credit cards with 12-18 month 0% interest
The credit card approach is not a traditional route, but I decided to look into it. I would save on the origination fee, save on interest if I paid it off before the end of the 0% interest period, and could also earn sign-on bonuses. I applied to 6 cards the same hour and was approved for 5 of them (credit score was ~799, now 762). All cards have $0 annual fee so I can keep them to help my credit score and not worry about fees.
I plan to make minimum payments and save over the next year until the rest is due. After receiving a tax refund, I will put that towards this debt. I have sufficient emergency fund and income that I won't need to worry about paying any credit card interest, as I am sure I can pay this all off today if I had to.
Total savings:
- $10,000 from negotiating and getting several quotes
- $2,245 from avoiding the origination charge
- $1,037 from cash back and sign on bonuses
Choosing to finance with credit cards vs taking the solar company financing saved me over $3000 and helped me drop the break-even time from 11 years to around 6. I also know I am taking a temporary dip in credit score due to the inquiries but hope long term will see a positive impact with the higher credit limit and more payment history.
Note: Yes, I am aware of opportunity cost and TVM. I know that I could have many scenarios where I compare these options with vanguard investments but I will spare you the details. I will still be contributing to my 401k, HSA, and IRA to the maximum allowed by law
Submitted October 19, 2017 at 10:20AM by rtowne http://ift.tt/2xQKyLo
