Rooftop Solar Panel Loan: How to Apply & What to Know

India’s continuous push toward renewable energy usage has made rooftop solar panel installations more affordable and accessible for homeowners than ever. 

Covering various government-backed subsidies and loan schemes, homeowners can now access solar power without bearing the entire upfront solar system costs. 

Continue reading as we delve into the basics of rooftop solar panel loans, such as how to apply and what you need for the solar panel installation process.

What is a Rooftop Solar Panel Loan?

The rooftop solar panel loan is a financial product designed to assist you in funding solar panel installation on your rooftops. This loan structure is intended to minimize the upfront investment hurdle that homeowners normally need to overcome in the first place. 

It also encourages the use of clean energy in residential areas. If you have begun to utilize solar power, you can reduce electricity costs dramatically and help towards a cleaner environment.

Key Features of Rooftop Solar Panel Loans:

1. Loan Amount: The estimated amount of loan generally varies from ₹50,000 to ₹6 lakh. The sanctioned amount of the loan relies on the solar system type and capacity that you have opted for according to your solar generation requirement.

2. Interest Rate: The rate of interest calculated by banking institutions varies between 6% and 9% annually. Solar loan interest at a minimum of 8.65% with a margin of up to ₹2 lakh is provided by SBI (State Bank of India).

3. Repayment Tenure: The repayment tenure is usually 5 to 10 years, allowing you, as the loan borrower, to better manage the repayments.

4. Collateral Requirement: As offered by banking institutions, loan amounts are often collateral-free for a certain amount. This option further makes it easy to access financing options through them. 

5. Eligibility for Subsidy: As a loan borrower, you are eligible to receive government subsidies like PM Surya Ghar Yojana, which is well-known for giving financial assistance for installing solar panels at your place.

Eligibility Criteria for Applying

You must meet the criteria below to qualify for a rooftop solar panel loan.

1. Citizenship: You must be an Indian citizen.
2. Ownership of property: The residential property where you intend to install a solar system has to be in your name.
3. Credit Score: A CIBIL check is required. You need to have a CIBIL score of at least 650, though this can vary from lender to lender.
4. Income Proof: You need to furnish bank statements, salary receipts, or ITR (Income Tax Return) documents to verify your financial stability with the loan lender.

Step-by-Step Loan Application Process

1. Registration: Go to the official web portal, like PM Surya Ghar, to begin registration. After registering, you are eligible to apply for the solar panel installation subsidy and view the vendor lists approved by the government.

2. Vendor Selection: You have to select a company from the list of approved vendors that provides proper installation and manages the subsidy approval process.

3. Loan Application: Provide all the required documents to get the loan via the bank or the NBFC (Non-Banking Financial Company) you selected for the loan process.

4. Verification & Approval: The lender of the loan will perform an instant credit check and verify your home location prior to approving the loan.

5. Installation & Commissioning: After performing the credit check and approval of the loan, you can go ahead with the process of solar system installation with the vendor. The vendor facilitates the approval of the grid connection.

6. Subsidy Disbursement: Once commissioned successfully, the corresponding subsidy amount will be deposited in your bank account or offset against the loan, depending on the choices given by the lender of the loan and your preference.

Top Banks and Financial Institutions Providing Solar Loans

SBI Surya Ghar Scheme

• Loan Amount: SBI (State Bank of India) solar rooftop loans up to ₹6 lakh.
• Interest Rate: Solar rooftop loans of ₹2 lakh and above will have an interest rate of 8.65% minimum
• Tenure: A maximum of 10 years.
• Collateral: Solar rooftop loans are collateral-free for up to ₹2 lakh.
• Subsidy: PM Surya Ghar Yojana subsidy eligibility

Bank of India STAR Loan

• Loan Amount: As a beneficiary, you are eligible for a maximum of ₹6 lakh.
• Interest Rate: Begins from 7% per annum.
• Tenure: Maximum 10 years.
• Collateral: Solar rooftop loans are collateral-free for eligible sums.
• Subsidy: Suited to existing government subsidy programs.

Canara Bank – Housing cum Solar Loan

• Loan Amount: 80% of the cost of solar system or ₹10 lakh, or 20 percent of eligible quantum under the housing loan component, whichever is less. 
• Interest Rate: Begins from 6.9% per annum.
• Tenure: Up to 20 years.
• Collateral: Highly depends upon the type and size of the solar grid system as chosen by the user.
• Subsidy: Based on the solar grid system. 

Benefits of Taking a Rooftop Solar Loan

• Financial Benefit: Cost of solar panels installation lowers to a significant extent, and it is within the reach of all.
• Environmental Benefit: You can promote green living in your community and even reduce your carbon footprint with your new conversion to using solar power.
• Savings in Energy: Recycling surplus power back to the grid reduces electrical expenses and generates potential revenue.
• Government Incentives: Allows for easy access to government subsidies and tax incentives that enhance your overall investment proposition.

FAQs

1. Can I get a rooftop solar loan without giving collateral?

Yes, collateral-free loans are offered by the majority of the solar loan lenders for up to a limited sum, which is typically ₹2 lakh.

2. Is there any prepayment charge if I pay the loan on time?

It is not prepayment penalty-free, but it is advisable to confirm the same with your solar panel loan lender.

3. What do I need to submit to apply for the loan?

You need to furnish your identity proof, income proof, property documents of ownership, and your last electricity bill paid.

4. How long does it generally take to approve the loan?

The rooftop solar loan process typically takes seven to fifteen business days from the date you apply with your documents. 

5. Can I obtain a loan for solar systems with capacities greater than 3 kW?

Yes, some lenders offer loans for larger-capacity systems. You will be required to go through more documentation processes or bring collateral outside of the pre-approved range.

6. Are government subsidies applied automatically when securing a loan?

No, subsidies have to be applied individually. With the support of the solar power dealer, you can apply and undergo the government subsidy process. They will help you in the entire registration, authentication, and installation process.

Conclusion

Rooftop solar installation offers homeowners financial as well as environmental advantages. With readily accessible loan facilities and assistance under government subsidies, you can ease the shift from a conventional electrical power system to solar energy consumption.

At Elsol, the best solar company in Kerala, we offer tailored solutions to suit your energy requirements. 

Our technicians ensure you add appropriate government subsidies and recommend rooftop solar loans, which you can comfortably repay as soon as possible.

We are just a phone call away to answer your questions about subsidies and rooftop solar loans. Call now.