Quick answer
Cash costs the least overall. If you finance, a home equity loan or line often beats an installer solar loan once dealer fees are counted: the CFPB found those fees typically add 10% to 30% to the cash price. Bankrate's average HELOC rate was 7.36% in October 2026, but HELOC rates are variable and the loan is secured by your home.
What are the ways to pay for solar?
| Option | How it works | Watch for |
|---|---|---|
| Cash | Pay the installer directly; the utility rebate and Illinois Shines incentive then lower your net cost | Ties up savings you might invest elsewhere |
| Home equity loan | Fixed-rate lump sum borrowed against your home | Closing costs vary by lender; your home secures the loan |
| Home equity line (HELOC) | Borrow as needed, often interest-only during a draw period, then repay | Variable rate tracks prime; payments can jump when repayment starts |
| Installer solar loan | Financing arranged through the installer, often with a low advertised rate | Dealer fees built into the price |
| Lease or PPA | A company owns the system; you pay monthly or per kWh | You don't own it or get the incentives directly |
Leases and power purchase agreements are a different decision; see solar lease vs. buy in Illinois.
How do the monthly payments compare?
| Option | Rate and term | Monthly payment | Total paid |
|---|---|---|---|
| Cash | Paid up front | None | $24,800 |
| Home equity loan | 8.7% fixed, 10 years | $310 | $37,220 |
| HELOC, if the rate held steady | 7.36% variable, 20 years | $198 | $47,440 |
| Installer solar loan with a 20% dealer fee | 7.24% APR, 20 years | $235 | $56,410 |
Rates are Bankrate's October 2026 averages for home equity and EnergySage's median quoted solar loan APR from late 2024; the 20% dealer fee is the middle of the CFPB's typical range. Your own rate depends on credit and lender. In every case the ComEd rebate and the Illinois Shines incentive, about $14,000 combined in our estimate, still lower your net cost, and you can put any rebate you receive toward the balance.
What is a solar dealer fee, and how do I spot one?
To advertise a low rate, many solar lenders charge the installer a fee, and the installer raises the system price to cover it. The Consumer Financial Protection Bureau found these fees typically run 10% to 30% of the cash price, and that some lenders raise the loan principal 30% or more above it, often without showing it as a cost of credit. Berkeley Lab researchers found loan-financed systems carry a price premium of around 16% to 26%.
The simplest check: ask every installer for the cash price and the financed price in writing. The difference is the fee. See solar loans and dealer fees in Illinois.
Is home equity interest tax-deductible for solar?
Sometimes. The IRS lets you deduct interest on home equity debt only to the extent the money is used to buy, build or substantially improve the home that secures the loan, within a $750,000 limit on total home debt ($375,000 if married filing separately), and only if you itemize. Whether solar counts as a substantial improvement for your situation is a question for your tax professional.
The federal solar tax credit for homeowners ended for systems installed after December 31, 2025, so loans built around paying down 30% with a tax refund no longer fit. See the federal solar tax credit in 2026.
When does paying cash make the most sense?
When you have savings that aren't earning more than solar would. Our estimate for a Chicago-area system is a payback of about 8.3 years after incentives; compare that with what the same money earns elsewhere in is solar a good investment?. Cash also avoids interest and any dealer fee, and gives you the strongest position to negotiate price.
What Illinois protections apply when I finance solar?
Illinois Shines requires you to receive and sign its standard disclosure form before you sign a contract, and signing it after the contract is a program violation. The program's guide also notes that financing may add to overall costs and that you have a right to cancel within three business days. Residential PACE financing isn't generally available in Illinois, so be wary of offers that describe it that way.
- 1
Get the cash price in writing
Ask for it even if you plan to finance, so you can see any dealer fee.
- 2
Price outside financing
Check a credit union or your bank for a home equity loan or line before you sign.
- 3
Read the payment schedule
Look for payments that rise after a set date or depend on a lump-sum paydown.
- 4
Check the lien
Ask whether the lender will file against the system or your home, and how that affects a refinance or sale.
Check any quote with our solar quote checker.
Sources
- Bankrate: HELOC rates (October 2026)
- Bankrate: Home equity loan rates (October 2026)
- EnergySage: Solar loans, high interest vs. low fees
- Consumer Financial Protection Bureau: Report on markup fees in solar energy loans (2024)
- CFPB: Issue spotlight, solar financing (August 2024)
- Berkeley Lab: Power now, pay later (2026)
- IRS: Publication 936, Home Mortgage Interest Deduction
- ComEd: Distributed generation rebate
- Illinois Shines: Final 2026–27 REC prices for the program year starting June 1, 2026
- Illinois Shines: Consumer protection overview (2025)
- Illinois Shines: Guide to going solar (June 2026)
- Renewable Energy World: Illinois PACE law excludes single-family homes (2017)
This guide is general information, not tax, legal or financial advice. Incentive programs change, so confirm current terms with your installer, your utility and a tax professional.