Direct Answer: If you stop paying your solar loan, the lender can report missed payments to credit bureaus, pursue collections, repossess the solar panels, or place a lien on your home. Ignoring payments does not cancel your solar contract and creates serious financial and legal consequences.
What Really Happens When You Miss Solar Loan Payments
Missing a solar loan payment feels like a solution when you are stuck in a contract you regret. But the reality is that solar lenders treat defaults the same way any secured lender does. The consequences escalate quickly, and each step becomes harder and more expensive to resolve. Here is what the typical timeline looks like after you stop paying your solar loan:
Days 1 to 30: Late Fees Begin
Most solar lenders have a grace period of 10 to 15 days. After that, solar loan late fees kick in. These fees vary by lender but commonly range from $15 to $50 per missed payment or up to 5 percent of the overdue amount. Companies like Mosaic, GreenSky, Dividend Finance, and Goodleap all charge late fees in their loan agreements.
Days 30 to 60: Credit Reporting Begins
At 30 days past due, most solar lenders report the delinquency to the major credit bureaus. A single 30-day late mark on a solar loan can drop your credit score by 60 to 110 points depending on your credit profile. At 60 days, a second delinquency report is filed, compounding the damage. If you were considering refinancing your mortgage, taking out a HELOC, or making any major purchase on credit, a delinquent solar loan can block all of those options.
Days 60 to 90: Default and Collections
At 60 to 90 days past due, your solar loan is typically declared in default. The lender may transfer the account to a collections department or a third-party debt collector. Collection calls, letters, and potential legal action all become possibilities at this stage.
After 90 Days: Lien Enforcement and Repossession
Once a loan is in default, lenders who filed a UCC-1 financing statement against your property have the legal right to enforce that lien. In theory, this means they can move to repossess the solar panels. In practice, repossessing panels attached to a roof is costly and complicated, but it is not unheard of. More commonly, a lender may pursue a civil judgment, which can then become a judgment lien against your home or other assets. According to the Consumer Financial Protection Bureau, judgment liens can remain on your property record for years and affect your ability to sell or refinance.
Can You Get Rid of a Solar Loan by Simply Stopping Payments?
No. Stopping payments does not get you out of a solar loan or cancel your solar contract. This is one of the most damaging misconceptions homeowners have when they want to exit solar loan payments. Your solar agreement is a binding financial contract. The only way to legally get out of solar loan payments is through one of the recognized exits: paying it off, refinancing, selling the home with the loan assumed by the buyer, or pursuing a formal contract cancellation based on legal grounds such as misrepresentation, predatory sales practices, or installer non-performance. Simply walking away from the payments exposes you to all of the consequences above while leaving the contract fully intact.
What Are Your Real Options to Get Out of a Solar Loan?
If you want to stop paying your solar loan the right way, here are the legally sound paths homeowners use:
Option 1: Pay Off the Loan Early
Most solar loans allow early payoff without a prepayment penalty, though you should verify this in your contract. Paying off your solar loan eliminates the monthly obligation, triggers UCC-1 lien termination, and resolves the debt cleanly. If you have equity in your home, a cash-out refinance, or a HELOC could cover the payoff amount.
Option 2: Refinance Your Solar Loan
Some homeowners refinance their solar loan into a home equity loan or a personal loan with a lower interest rate. This does not eliminate the debt but can lower your solar loan monthly payment significantly, making it more manageable. Solar loan interest rates range from around 2.99 percent to 25 percent depending on the lender, your credit, and the loan term. If your rate is high, refinancing could reduce your costs substantially.
Option 3: Sell Your Home and Transfer the Loan
If you are selling your home, some solar loans are assumable, meaning the buyer can take over your solar loan payments. Not all loans allow this, and not all buyers are willing. If the buyer agrees, the lender processes an assumption and you are released from the obligation. If the buyer does not want to assume the loan, the sale proceeds are typically used to pay it off at closing.
Option 4: Cancel the Solar Contract on Legal Grounds
This is the path that many homeowners are not aware of. If your solar contract was signed under misleading or deceptive circumstances, you may have grounds to pursue a formal cancellation. Common grounds include:
- Misrepresentation of savings projections or energy output
- Failure to disclose total loan costs, solar loan fees, or interest terms
- Unauthorized installation changes
- System underperformance with no remedy offered
- Predatory door-to-door sales tactics that violated state consumer protection laws
Canceling a solar contract through this route typically requires working with a solar cancellation specialist or a consumer protection attorney. It is a structured legal process, not simply walking away.
How Much Does a Solar Loan Actually Cost You Over Time?
Many homeowners sign solar loans without fully understanding the total cost picture. Here is a breakdown of what solar loan fees and charges can add up to:
| Cost Type | Typical Range |
| Solar loan origination fee | 0% to 9% of loan amount (dealer fee) |
| Solar loan interest rate | 2.99% to 25% APR |
| Late payment fee | $15 to $50 or 5% of payment due |
| Prepayment penalty | Usually none, but verify in contract |
| Total loan cost on $30,000 over 25 years at 6.99% | Approximately $63,000+ |
The dealer fee, also called the lender fee or finance charge, is one of the most misunderstood solar loan costs. It is built into the loan principal rather than disclosed upfront, which means many homeowners are financing 10 to 25 percent more than the actual cost of their solar system without realizing it.
Solar Loan vs Solar Lease: Are the Consequences Different?
Yes. If you stop paying on a solar lease or power purchase agreement (PPA) instead of a loan, the consequences differ slightly but are still serious. With a solar lease, you do not own the panels. The solar company does. If you stop making solar panel lease payments, the company can:
- Pursue collections for the unpaid balance
- Terminate the lease and remove the panels
- Sue you for remaining lease costs if your agreement includes an early termination penalty
Solar lease exit costs and solar PPA cancellation fees can run into the tens of thousands of dollars, especially if you are in the early years of a 20 to 25 year agreement. Some homeowners have faced early termination liabilities of $15,000 to $30,000 or more. According to EnergySage’s solar market data, the average residential solar installation in the U.S. costs between $15,000 and $30,000 before incentives, which gives you a sense of the financial exposure involved.
What About the Solar Tax Credit If You Default?
If you claimed the federal solar investment tax credit (ITC) and then stop paying your loan or cancel your contract within five years, there may be tax implications. The IRS requires that the system remain in service for the recapture period. If it is removed before that period ends, you may have to repay a portion of the tax credit. This is an area where consulting a tax professional is strongly recommended before making any decisions about exiting your solar agreement. The IRS guidance on energy credits covers the general framework, though solar-specific recapture rules can be nuanced.
Steps to Take If You Are Struggling With Solar Loan Payments
If you are already behind or worried about falling behind, here is what to do right now:
- Contact your lender immediately and ask about hardship programs, payment deferrals, or modified payment plans. Many solar lenders have options they do not advertise.
- Review your original solar contract and look for any performance guarantees, misrepresentation, or undisclosed fees that could support a cancellation claim.
- Do not miss payments without a plan – each missed payment compounds the credit and legal consequences.
- Get a professional review of your contract before making any decisions about stopping payments or attempting to exit the loan.
- Consider a solar cancellation consultation if you believe your contract was sold to you under false pretenses or if the system has not performed as promised.
Solar Equity Solutions is a BBB-accredited solar contract cancellation company with experience across all major solar lenders and installers. With more than 5,000 contracts successfully cancelled, they offer free consultations for homeowners exploring their options.
Frequently Asked Questions
What happens to my credit if I stop paying my solar loan?
Your lender will report the delinquency at 30 days past due. This can drop your score by 60 to 110 points and remain on your credit report for up to seven years.
Can I get out of my solar loan if the panels do not work properly?
System underperformance may give you grounds to pursue a contract cancellation, especially if the company made specific savings guarantees they have not honored. A cancellation specialist can evaluate your case.
Will stopping solar loan payments affect my ability to sell my home?
Yes. An active solar loan or lien will appear in a title search and must be resolved before your home can close. Buyers and their lenders require clean title.
Are there solar loan forgiveness programs?
There are no government solar loan forgiveness programs. Some settlements or class action resolutions have provided partial relief to homeowners affected by specific solar company misconduct, but these are case-by-case situations.
Can a solar company take my panels back if I stop paying?
Technically yes. If a UCC-1 lien is in place and you default, the solar company has the right to repossess the equipment. In practice, roof-mounted panel repossession is rare but does happen, and a civil judgment against you is a more common outcome. Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. Every solar contract is different. Consult a licensed attorney or qualified solar cancellation professional before making decisions about your solar loan or contract.