"Looking for the best options for a loan for solar panel installation in India? Explore this blog to find affordable financing solutions for your solar energy needs."
Published: 21 February 2025
Updated: 30 April 2025
Are the high power costs and frequent power cuts becoming a headache? Solar energy is the remedy you need! Solar power is an intelligent decision to lower electricity bills and adopt sustainability. Yet, the initial installation cost of solar panels is intimidating. An average 3 kW rooftop solar system runs from ₹1.5 lakh to ₹2 lakh, and a 5 kW system runs over ₹3 lakh. Not everyone can afford to pay this amount in one go.
If the cost is causing you to give up on the idea of adopting solar panel systems, here’s the solution. With solar panel loan options, you can make this investment accessible.
In this blog, we will explore financing options, compare different loan offerings, learn about government subsidies, and offer tips to secure the best loan for your solar panel installation.
Homeowners and businesses can now purchase and have solar energy systems installed without paying the entire amount upfront. This is made possible with a solar panel loan. A loan enables the borrowers to repay the amount over time instead of paying the entire installation fee upfront, making solar energy more affordable and within reach.
Let us try to understand with an example:
Rahul, an Indian homeowner, was required to spend ₹3 lakh installing a 5 kW solar panel system. He chose to take out a bank loan for solar panels with a 5-year repayment period and 10% interest rate, rather than paying the entire cost upfront.
Financial Breakdown:
(₹18,000/kW for the first 3 kW and ₹9,000/kW for the remaining 2 kW under the PM Surya Ghar Muft Bijli Yojana)
Rahul got the system installed by an MNRE-approved vendor and registered through the National Rooftop Solar Portal. After installation, the local DISCOM installed a net meter. Through this meter, he could export excess electricity to the grid and receive credit on his bill.
Benefits Rahul Enjoyed:
There are several ways to avoid an upfront cost and benefit from options:
Indian banks offer green energy loans tailored for home, business, and industrial solar installations. These loans feature:
Do you need funding that is easy and quick? NBFCs and fintech lenders offer quick online loans with easy application processes and little paperwork. Due to stringent credit conditions, these loans are appropriate for applicants who might not be eligible for conventional bank loans.
Top lenders include:
Interest rates range from 10–18% annually, offering faster approvals but higher costs compared to traditional bank loans.
Top-up loans are an option available to homeowners who have home loans actively running. A top up for solar panels helps with installations. Compared to personal loans, these loans usually feature longer repayment terms, less paperwork, and lower interest rates (7–10% annually).
Indian institutions that provide top-up loans linked to home loans include ICICI Bank, SBI, and HDFC Bank.
Want solar energy without upfront costs? Solar leasing or PPAs are the alternatives you need. Under these models:
Through financial incentives, subsidies, and affordable loans, the Indian government actively encourages the use of solar energy:
1. Farmers who install solar pumps or power plants can receive subsidies under the PM-KUSUM Scheme
2. Homeowners can get up to 40% subsidies under the Ministry of New and Renewable Energy’s (MNRE) Residential Rooftop Subsidy.
These initiatives substantially reduce installation costs. They make solar power accessible to small businesses and households.
Solar loan interest rates in India vary based on lender type, loan size, and repayment tenure:
1. Bank Loans: Typically 8–12% per annum, a good and stable source.
2. NBFC & Fintech Loans: Higher rates (10–18%) but quicker approvals and less documentation
3. Home Loan Top-Ups: Lowest rates (7–10%), the affordable option.
The ideal solar panel loan is one that is affordable, has a long tenure, and is easy to get approved.
1. Credit Score: A high CIBIL score (>750) guarantees better (lower) interest rates.
2. Loan Tenure: Shorter loan terms result in higher EMIs but lower overall interest. Longer terms result in lower EMIs but higher overall expenses.
3. Lender Type: Compared to NBFCs or fintech lenders, banks often provide cheaper rates. Faster approvals are provided by fintech lenders.
Always check for processing fees, prepayment charges, and hidden costs to avoid surprises.
Compare different banks, NBFCs, and fintech lenders to secure the best rate.
Many homeowners forget to apply for MNRE subsidies, leading to higher costs.
Always choose BIS-certified solar panels for better efficiency and long-term durability.
Want to finance your solar panels the right way? Here’s how to find the best loan:
Banks, NBFCs, and fintech lenders have different interest rates. Banks usually provide lower rates but may have a longer approval process. NBFCs and fintech lenders offer quicker approvals and often have minimal paperwork. Comparing options helps you secure the best deal.
A CIBIL score over 750 can help you get a lower interest rate. Lenders consider high scores a sign of responsible financial behaviour. To boost a low score, pay off debts, make timely payments, and lower credit usage before applying for a loan.
Your loan tenure impacts your monthly EMI and total interest cost. A shorter loan term means higher EMIs. But, it reduces total interest, helping you pay off your loan faster. A longer tenure reduces your EMI but increases your pay over time. Choose a tenure that balances affordability and long-term savings.
The Indian government provides subsidies to help people adopt solar energy. For instance, MNRE (Ministry of New and Renewable Energy) gives subsidies. This support helps cut your initial costs. Some banks also provide green loans at lower interest rates. Checking for these incentives can help reduce your financial burden.
Look over the terms and conditions before closing any loan. Watch out for hidden charges, processing fees, prepayment penalties, and late payment fees. Some lenders charge high fees for early loan repayment, which can impact your savings. Always clarify these details to avoid unexpected costs.
Compare many lenders, negotiate rates, and pick a plan that saves you the most in the long run!
Making the switch to solar energy has long-term financial benefits in addition to being an environmentally conscious move. Utilising government incentives and comparing interest rates offered by banks and lenders helps in choosing the best financing solution for your solar needs.
Make the move to solar power now to save money and help create a more sustainable future!
Also read: Switch to Solar with Affordable Solar Rooftop Loans
Most lenders must have a CIBIL score of at least 650, but 750+ is ideal for better rates.
Interest rates range from 7% to 18% per annum, depending on the profiles of the lender and borrower.
Most borrowers prefer 12-year or 20-year solar loans. A 12-year loan has higher EMIs but saves on total interest. In contrast, a 20-year loan has lower EMIs but costs more in interest.
Most lenders require a score of at least 650; however, scores above 750 qualify borrowers for better interest rates.
Interest rates range from 7% (home loan top-ups) to 18% (NBFCs/fintech lenders).
Yes, unsecured loans are available but may have higher interest rates due to increased risk for lenders.
Yes, under Section 80EEA of the Income Tax Act, you may qualify for tax relief on green energy investments like solar panels.
Most borrowers prefer 12-year or 20-year solar loans. A 12-year loan has higher EMIs but saves on total interest. In contrast, a 20-year loan has lower EMIs but costs more in interest.
