Tax-Advantaged Solar loans are designed to give customers the full benefit of the Investment Tax Credit (ITC) for the first 18 months of their loan. These loans are extremely effective options for borrowers that can take full advantage of the tax credit in the year the installation work is performed, and here's why:
Tax-Advantaged solar loans are provided interest-free on 30% of the Project's Cost during the first 18 months (measured from the loan's Start Date). The 30% is still owed to the lender upon maturity, but that portion of the loan principal is provided interest-free during that initial 18-month period. That means borrowers pay a significantly reduced monthly payment for 18 months.
Following the introductory 18-month period, the entire outstanding principal balance of the loan (including the 30% that was provided interest-free previously) is re-amortized over the remaining duration of the loan's term.
Note: This 18-month period is measured from the Loan's Start Date and includes an initial 6-month no-monthly payment period. During the initial 6-month no-monthly payment period, interest will accrue based on the amounts distributed to the installation company. Accrued interest is capitalized into the loan. To remove the impact of the capitalized interest, borrowers can simply make a prepayment.
To better understand your minimum monthly payment based on the terms of these loans, there are three scenarios to consider:
- If a customer chooses not to prepay its solar loan in the amount of the ITC before the 18th month from the Loan Start Date, the customer’s monthly loan payment will increase. The maximum amount of the increase is shown in your application and loan documentation.
- If a customer chooses to prepay its solar loan in the amount of the ITC before the 18th month from the Loan Start Date, the customer’s monthly loan payment will be approximately the same.
- If a customer chooses to prepay an amount greater than the ITC before the 18th month from the Loan Start Date, the customer’s monthly loan payment will decrease.
Following the first 18 months of a Tax-Advantaged Solar loan, Borrowers can take advantage of fee-free, every-time re-amortizations with principal prepayments of $500 or more. This unique feature allows customers to incorporate future tax periods to fully realize the benefit of the ITC if your tax liability is not enough in your first year. This feature is also useful for homeowners wishing to periodically prepay their loan to better manage their monthly energy costs and to proactively minimize the amount of interest paid into the loan.
Both Tax-Advantaged Loans and Simple Amortizing Loans are excellent options to electrify your home and gain energy independence. Be informed and choose the right loan product for you. To get more information, please contact loan_servicing@joinatmos.com.
Please note: Atmos is not a tax consultant and does not provide tax advice. To understand the implications of the ITC for your situation or for other tax-related questions, please consult a tax advisor.