The initial outlay for installing a residential rooftop solar PV system continues to be the main obstacle for most Indian households and businesses, even with government subsidies included. Complimenting PVs were solar loans, which allowed users to be provided with a system with minimal or no upfront costs and to pay for the system monthly through equal repayments (EMIs), which could easily be offset by the savings on their electricity bills from day 1.

Many homeowners today are exploring solar financing options to make rooftop installations more affordable.

Access to a solar loan allows consumers to install systems without paying the full upfront amount.

What is a Solar Loan?

Solar loans are a financing product specifically designed for the purchase and installation of a solar PV system. The borrower will pay back the loan through EMIs over an agreed term of 2 to 15 years, benefiting from both reducing electricity costs and using the savings over the term of the loan to pay for the system.

A solar panel loan is specifically structured to support rooftop solar installations for residential users.

Financial institutions now provide solar panel financing programs that reduce the initial investment burden.

Types of Solar Loans in India

Secured Solar Loans

These loans are secured by collateral such as real estate or fixed deposit authorizations and generally have a lower interest rate (7-10%) and longer repayment terms (up to 15 years). Secured loans are suited for larger residential PV systems and also for commercial and industrial users with higher loan amounts.

Unsecured Solar Loans

These loans are unsecured and have the advantage that the Indian government has mandated that all nationalized banks will offer collateral-free loans at discounted interest rates for residential rooftop solar systems under the Prime Minister's Surya Ghar Muft Bijli Yojana. Public Sector Banks (PSBs) such as State Bank of India, Canara Bank, and Bank of Baroda are engaged in this program and are offering the easiest way for residential customers to receive loan funds.

Government-backed initiatives have increased access to solar loan programs for residential consumers.

Several public banks also provide loans for solar system installations under renewable energy financing schemes.

Key Providers of Solar Loans in India

Lender	Product	Approx. Annual Percentage Rate	Maximum Period of Loan to Borrow	Number of Years Class of Credit
State Bank of India	SBI Surya Shakti	7% - 9%	10 years	10 years
Bank of Baroda	Baroda Solar Loan	8% - 10%	10 years	10 years
Canara Bank	Solar Power Loan	8% - 10%	7 years	7 years
Punjab National Bank	PNB Solar Scheme	9% - 11%	10 years	10 years
Various NBFCs & Fintechs	Multiple Products	11% - 16%	3 years	5 years

Many NBFCs and fintech companies (e.g., Tata Capital, Hero FinCorp, Electronica Finance, etc.) process applications at much quicker speeds than traditional banks, thus many smaller residential and time-sensitive commercial solar projects get financed through these lenders.

These organizations are among the leading solar financing companies supporting solar adoption in India.

As a residential consumer, if you finance your solar project through a solar loan and take advantage of the PM Surya Ghar subsidy, you will greatly decrease the net cost of owning and operating solar energy.

Consider a typical 3 kW system. Here is how the numbers break down:

Type of Information	Value
Cost of System Before Subsidy	Rs 2,00,000 - Rs 2,30,000
Subsidy Received	Rs 78,000
Amount to be Financed	Rs 1,20,000 - Rs 1,50,000
Monthly EMI for 5 Years	Rs 2,500 - Rs 3,200
Monthly Savings on Electricity Bill	Rs 2,500 - Rs 3,500
Net Monthly Outflow to Own and Operate a Solar System	0 or Positive Cash Flow

In most cases, energy savings usually offset the monthly EMI payment, resulting in a 25-year panel life; there are quite a few substantial long-term financial benefits.

This example demonstrates how solar panel financing helps households achieve energy savings from day one.

Eligibility Criteria for Residential Borrowers

• Residents of India who are either self-employed or salaried
• Age 21 to 65
• CIBIL Score 700 and above
• Valid electricity connection issued in the individual's name, or provide a No Objection Certificate (NOC) from the electricity connection holder
• The system has to be installed by an empanelled vendor

Applying for a solar panel loan usually requires standard credit verification and financial documentation.

Business Solar Loans

Due to the higher tariff associated with business (commercial and industrial) electric utility bills and because businesses consume much higher volumes of electricity when compared to homes, the payback associated with solar investments for businesses is much more attractive. Most of the time, business solar loans have been structured differently than residential loans because commercial/industrial loans are of a much larger monetary amount and have different operational needs.

Many companies now rely on solar system financing to install large rooftop or ground-mounted solar systems.

Business Solar Loans Generally Cover

• Rooftop systems that are 10 kW up to several hundred kW in size
• Ground-mounted solar systems for manufacturing factories, distribution warehouses, and large campus areas
• Loan amounts ranging from Rs. 5,00,000 and above to Rs. 5,00,000,000 and above
• Repayment structures that match projected energy savings

Large installations often require a dedicated solar installation loan from banks or NBFC lenders.

Additional Business Financial Benefit

Businesses can take advantage of an accelerated depreciation of 40% in the first year on solar assets used for their businesses, which will automatically lower the taxable income of the business and significantly improve their overall return on investment. When you combine the financing from your loan with this tax benefit, you make solar one of the most tax-efficient capital expenditures that any business can spend.

Many commercial users finance projects through a loan for solar system investments that are structured around projected energy savings.

Eligibility Criteria for Business Borrowers

• There must be a registered business entity (i.e., Proprietor, Partnership, Privately Owned Limited Company, or LLP)
• Business must have at least 2-3 years of established operating history
• Must provide ITR, GST registration, and financial statements
• Must have a satisfactory credit history and debt-service coverage ratio

Businesses often evaluate solar loan structures before investing in large-scale renewable energy systems.

EMI Vs Savings: Does It Make Sense To Get One?

The main question that every borrower will have to determine before signing a loan agreement is whether or not the monthly payments

Residential Example 3KW

Parameter	Value
Monthly EMI	Rs 2,500 - 3,200
Monthly bill savings	Rs 2,500 - 3,500
Net Cost	Near Zero

Commercial Example 25KW

Parameter	Value
Monthly EMI	Rs 18,000 - 22,000
Monthly bill savings	Rs 20,000 - 30,000
Net Gain per month	Rs 2,000 - 10,000

For businesses with high daytime use, savings should exceed the monthly EMI immediately upon taking out the loan, thus making it virtually self-amortizing.

Solar projects funded through solar panel financing can therefore become cash-flow positive within a few years.

Things to consider when taking out a solar loan

• Processing Fees - Most lenders charge a processing fee of 1-2% of the loan amount at origination. This should be considered as part of your total cost when comparing loan products.
• Prepayment Penalty - If you intend to use your subsidy disbursement to partially prepay the loan, check for prepayment or foreclosure fees from the lender before comparing loan products.
• Disbursement Structure - Make sure the lender issues funds to you at certain installation milestones or directly to the vendor instead of issuing all funds together in one lump sum payment.
• Fixed vs Floating Rate - Fixed rates give you certainty as far as repayment, while floating rates may have a lower initial rate; however, there is a risk that floating rates may increase during the term of the loan.
• Loan to Cost Ratio - Some lenders only fund 70-80% of the system cost, requiring a down payment from you before installation. Verify the loan-to-cost ratio before installing to avoid running out of financing for your system once it has been installed.

Many homeowners compare different solar panel loan products before selecting a lender.

Go Solar with Waaree

If you combine a solar loan with a government subsidy, it is critical to select the right lender as well as the correct solar partner. Waaree has established itself as one of the top solar manufacturers and installers in India, catering to both home and business clients by providing a complete range of products and services, which support your buying decision.

What makes Waaree the best choice?

• All of our solar panels are ALMM-certified & qualify for the PM Surya Ghar Scheme.
• All of our inverters and other system components are BIS-certified.
• We provide complete support in applying for the subsidy and getting net metering installed.
• We have an installation and after-sales network throughout India.
• Our panels come with long-term performance warranties.
• We offer a clear milestone payment plan.

Whether you are applying for a solar loan, exploring solar panel financing, or looking for a loan for a solar system, choosing a reliable installer ensures long-term performance and savings.

FAQs

Am I able to get a solar loan without having to pay a down payment?

A number of public sector banks participating in the PM Surya Ghar scheme provide 100% financing with no down payment required for residential solar installations. However, some lenders may ask for 10 to 20% upfront as part of the solar loan agreement. It is advisable to compare multiple lenders before making a decision to find the best terms for your situation.

Is the subsidy going to be applied on top of my solar loan?

The PM Surya Ghar subsidy is transferred directly into the applicant's bank account via electronic transfer and is not applied as a direct offset against the loan amount with the lender. This means you receive the subsidy separately and can choose to use it to prepay part of your solar loan, subject to the lender's prepayment terms.

Will getting a solar loan hurt my credit score?

Like any other loan, a solar loan will be reported to credit bureaus using the same criteria as personal loans or home mortgages. Making timely EMI payments will help improve your credit score over time, while missed or delayed payments will have a negative impact. Maintaining a consistent repayment record is important for your overall credit health.

Can a business receive both accelerated depreciation and the PM Surya Ghar subsidy?

The PM Surya Ghar subsidy is available to residential customers only and is generally not applicable to commercial or industrial solar installations. Commercial users can instead benefit from accelerated depreciation of 40% in the first year on solar assets. The subsidy and accelerated depreciation cannot typically be combined for the same solar power system.

How long does it take to get approved for a solar loan?

Public sector banks typically take between 7 and 15 working days to process and approve a solar loan application. Non-banking financial companies and fintech lenders generally process applications faster, with approvals and disbursements completed within 2 to 5 working days. If your installation requires urgent financing, NBFCs and fintech lenders are usually the quicker option.