Just two months after launching PowerSwitch Zero, a loan that features a 12-month promotional period where customers don’t have to make payments on the system, Mosaic has announced two new residential solar loans: a 0.99% APR 20-year loan and a 1.99% APR 25-year loan.
The two new offerings are aimed at cost-conscious consumers who have become aware the benefits of owning solar during the pandemic.
The two new loan offerings have been enabled by the completion of Mosaic’s eighth asset-backed securitization, a $222 million offering placed with more than 20 unique investors.
It’s this investor confidence in Mosaic’s loan assets and the strength of previous loans’ performance that has given the company access to lower cost of funds, enabling Mosaic to offer the new rates, according to CEO Billy Parish.
“We are very excited about these new products.” Parish told pv magazine USA. “They represent the lowest finance rates the market has ever seen. The 0.99%, 20-year product is the lowest APR that we think is available for a long-tenor product like that, same with the 1.99%, 25-year product. These products and the new pricing that we’re bringing to market brings the average cost of the average solar project to less than $100 a month, which means that customers have very affordable monthly payments and advances our mission of making solar accessible to everyone.”
This is the third new loan offering that Mosaic has launched this year, which has come conveniently as many homeowners are assessing their spending habits in the wake of the economic slowdown that Covid-19 brought. However, unlike PowerSwitch Zero, these two new offerings were developed not only to meet issues brought on by the pandemic, but other difficulties facing new customers, like the step-down of the federal investment tax credit (ITC) set to take place in January
“We are looking at the ITC likely dropping from 26% down to 22% next year and these new products and the lower pricing across the board absorbs some of that impact,” Parish said. “They enable contractors to offer similar monthly payments, even with the ITC reduction.”
According to Parish, it’s not just homeowners that Mosaic had in mind while developing the new offerings, but also installers who are facing slowdowns in business in light of the pandemic and impending reduction of the ITC.
“We think of it as a win-win,” Parish explained. It certainly enables the contractors to offer more affordable rates to make it easier for customers to say yes and it reduces the monthly payment for borrowers. As people are deciding whether or not to go solar, they will now see lower monthly payments than they saw in the past, which makes it more attractive and it enables them to save money.”
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The Dealer fee is astronomical though. Just like buying points on a mortgage..
Chris, do you know what the fees are on those new producs?
No Free Lunch. Tesla is offering 5.99% Fixed over 10 years for both their Solar Glass Roof and solar panels about what Banks are loaning money for Personal loans. How can Mosaic offer such rates for an unsecured loan? Lines of credit for Homes are still 3.99% and they are secured. The origination fee charged, back to the contractors, must be off the charts. And these will be passed onto the customer.
It is good to have options though. Even if the origination is 25%, monthly cost will be much much lower on a 10yr 0.99% than a 10yr 5.99%. 6% interest is insanely high.
Unless paid off early, the real cost of the loan is simply the monthly payments times the # of months.
So for customers interested in a low monthly payment, this is great. For someone who ALMOST can afford cash and will pay it off within 3 years, the interest doesn’t matter anyway and sure a high interest loan may make more sense. Either way options are good.
This is the biggest case of tax fraud in the history of the country. The “dealer fee” is an undisclosed finance charge to the customer that artificially reduces the interest rate seen by the borrower (likely 20% for these products). The Truth in Lending Act defines a finance charge as the difference between a cash or finance sale. Installers offer cash discounts so this is a finance charge. Finance charges are not eligible for the solar tax credit per the tax code. That means that the finance company is forcing tens of thousands of customers to commit tax fraud. Wonder what CFPB and IRS think about that?
Brilliant point. It also creates difficult conversations at the kitchen table between the sales reps and the Home owners when trying to explain the difference in the loan amount.