Plain-English definitions
Solar financing glossary.
Every term we use across the site, defined in plain English. Bookmark this page—most installers will throw at least three of these at you in a quote meeting.
- APR (Annual Percentage Rate)
- The yearly cost of a loan including interest plus most fees, expressed as a percentage.
- On a Sunlight Financial loan, the quoted APR includes the base interest rate but excludes the dealer fee—which is rolled into the financed principal. The effective APR after dealer fee is materially higher than the headline number on a 0.00% or 1.99% promotional tier.
- Dealer fee
- The amount a contractor pays a point-of-sale lender to offer a promotional APR. Rolled into the system price you finance.
- A dealer fee can run $1.50–$5.00 per watt on aggressive promotional tiers, materially increasing your loan principal. You don’t see it as a line item—it’s baked into the “system price” quoted on your contract. Always ask the installer for the cash price alongside the financed price; the difference is roughly your dealer fee.
- Federal Investment Tax Credit (ITC)
- A 30% federal tax credit on residential solar systems through 2032, stepping down through 2034 and expiring for residential systems in 2035.
- Authorized under IRC Section 25D as amended by the Inflation Reduction Act of 2022. To claim, file IRS Form 5695 with your tax return for the year the system is placed in service. The credit applies to loans and cash purchases; with leases and PPAs, the lessor (e.g., IGS Solar) captures the credit, not you.
- Point-of-sale lender (POS)
- A lender that originates loans through a network of installer or retailer partners rather than direct-to-consumer.
- Sunlight Financial, GoodLeap, Mosaic, Dividend Finance, and Sungage are all POS lenders. You can’t apply directly—you apply through a participating contractor who enters your information into the lender’s portal. This is faster than a personal loan application but limits your ability to comparison-shop across lenders.
- Re-amortization
- Recalculating a loan’s payment schedule based on a paydown, typically at month 18 for solar loans.
- Most Sunlight Financial loans assume you’ll apply the federal tax credit (about 30% of system cost) to principal within 18 months. If you do, payments stay low. If you don’t apply that payment, the loan re-amortizes at month 18 and your monthly payment increases substantially. This is the most-misunderstood structural feature of POS solar loans.
- Soft credit pull vs hard credit pull
- A soft pull doesn’t affect your credit score; a hard pull (used for full loan applications) does, typically dropping it 3–7 points.
- Solar loan prequalification typically uses a soft pull—you can shop multiple lenders without impacting your score. A hard pull happens when you commit to a specific lender’s full application. Sunlight’s Orange® portal performs the hard pull at the point of contract signing, after you’ve agreed to a specific quote.
- FICO score tiers
- Prime: 740+. Near-prime: 700–739. Mid-prime: 650–699. Sub-prime: below 650.
- Sunlight Financial requires a 650 FICO minimum, putting it solidly in the mid-prime+ space. Best promotional rates (0.00%, 1.99%) require prime credit (740+). At 650–700 FICO, expect standard-tier APRs in the 5–7% range, comparable to GoodLeap and Mosaic for similar profiles.
- Solar lease
- A financing arrangement where a third party (the lessor) owns the system and you pay a fixed or escalating monthly fee to use it.
- Sunlight Financial partners with IGS Solar on its lease program, launched April 2024. The lessor captures the federal tax credit and depreciation benefits; you avoid the upfront cost and credit denial risk. The trade-off: you don’t build equity in the system, and selling your home requires lease transfer to the buyer.
- Power Purchase Agreement (PPA)
- Similar to a lease, but instead of a fixed monthly fee, you pay per kilowatt-hour the system produces.
- PPAs are common in some states (California, Massachusetts) where production guarantees are stronger. Like a lease, the third party owns the system and captures the tax credit. The math is similar; the difference is whether you pay for the system (lease) or the electricity it makes (PPA).
- Net metering
- A utility billing arrangement where you receive credit for excess electricity your solar system exports to the grid.
- Net metering rules vary by state and utility—some pay retail rate (1:1 credit), some pay wholesale (significantly less). California’s NEM 3.0 dramatically reduced solar payback economics in 2023. Always check your utility’s current net-metering tariff before financing a system; it directly affects how long the system takes to pay for itself.
- Origination fee
- An upfront fee charged by a lender to process a loan, typically expressed as a percentage of the loan amount.
- Sunlight Financial does not charge a separate origination fee; the cost is captured in the dealer fee paid by the installer (and rolled into your system price). Personal-loan lenders like SoFi or Marcus typically do charge separate origination fees of 1–6%.
- Debt-to-Income Ratio (DTI)
- Monthly debt payments divided by gross monthly income, expressed as a percentage. Lenders use it to assess repayment capacity.
- Sunlight Financial typically requires a DTI under 50% (some products under 43%). This includes your mortgage, car loans, student loans, credit card minimums, and the new solar payment. Calculate yours before applying—a high DTI is the most common reason for denial at prime FICO scores.
- Production guarantee
- An installer’s promise that a solar system will produce a specified amount of electricity over a set period.
- Quality installers offer a 20- or 25-year production guarantee, paying you the difference if the system underproduces. The guarantee is only as good as the installer’s solvency—and the solar installer industry has seen significant company closures since 2023. Verify the guarantee is backed by an insurance product, not just the installer’s balance sheet.
- Solar Renewable Energy Credit (SREC)
- A tradable certificate representing one megawatt-hour of solar electricity generation. Available in some U.S. states.
- SREC markets exist in DC, Delaware, Illinois, Maryland, Massachusetts, New Jersey, Pennsylvania, and Ohio. SREC prices vary by state, ranging from a few dollars to over $200 per credit depending on supply. Material to system payback economics in those states; irrelevant in California, Texas, and most other markets.
- HELOC (Home Equity Line of Credit)
- A revolving line of credit secured by your home’s equity, typically with variable interest rates.
- For homeowners with significant equity, a HELOC from Figure, your credit union, or your existing mortgage lender is often cheaper than a Sunlight solar loan once dealer fees are factored in. Current HELOC rates run 7–9% (variable); Sunlight’s effective rate (after dealer fee) is usually higher. The trade-off: HELOCs put your home as collateral, so default risks foreclosure.
- UCC-1 financing statement
- A legal notice filed by a lender claiming an interest in collateral. Solar lenders may file these on the panels themselves.
- Sunlight Financial files UCC-1 statements on the solar equipment for some product tiers. This is not a lien on your house, but it does mean the panels are technically encumbered. When you sell, the lien must be cleared—handled at closing if the loan is paid off, or transferred via assignment to the buyer.
- Promotional APR / teaser rate
- An advertised low or 0% interest rate available only on certain loan products, terms, or with required behaviors.
- Sunlight’s 0.00% APR is real but only available on specific term lengths (typically 6-month deferred) and only for prime borrowers. The catch is that the dealer fee is highest on the lowest APR tiers—so the “0%” loan often has the highest effective APR once that fee is amortized into the system price.
- Loan-to-Value Ratio (LTV)
- The loan amount divided by the value of the asset being financed.
- Not directly applicable to most Sunlight loans (which are unsecured), but used in HELOC and home-equity loan underwriting. HELOC LTV typically caps at 80–85% of home value, including your first mortgage balance. If your house is worth $500K and your mortgage is $350K, your maximum HELOC is roughly $50–$75K.
- Third-party ownership (TPO)
- A financing structure where a third party owns the solar equipment and the homeowner pays for the service it provides. Leases and PPAs are both forms of TPO.
- Roughly half of new U.S. residential solar installations are TPO arrangements. TPO simplifies the homeowner’s decision—no upfront cost, no maintenance responsibility, no tax credit paperwork—but yields the lowest long-term financial benefit. Loans and cash beat TPO over a 25-year horizon if you stay in the home.
- CFPB (Consumer Financial Protection Bureau)
- U.S. federal agency that supervises consumer financial products. Maintains a public complaint database.
- The CFPB Consumer Complaint Database at consumerfinance.gov is the best public record of consumer issues with any financial company. Search any lender—including Sunlight Financial, GoodLeap, Mosaic—to see complaint categories, response rates, and resolution patterns. Reading actual complaint narratives (when consumers consent to publish) is more informative than the count.
Spot a term we missed?
Email [email protected] and we’ll add it. We re-check the glossary every 6 months for new industry terminology.