If you financed a solar panel system and feel like you were not told the full story about your loan, you are not alone, and you may have more legal protection than you realize.
The Truth in Lending Act, commonly known as TILA, is a federal law that requires lenders to be fully transparent about your loan terms before you sign anything. When solar lenders fail to meet those standards, it can be grounds to challenge or even cancel your contract.
Quick Answer: What Is TILA?
TILA, or the Truth in Lending Act, is a federal consumer protection law enacted in 1968. It requires lenders to disclose the full cost of a loan in clear, standardized terms before the borrower signs.
This includes the annual percentage rate (APR), total amount financed, finance charges, payment schedule, and any applicable fees. For solar loans, TILA is one of the most important legal protections homeowners have.
What Does TILA Require Lenders to Disclose?
Under TILA, your solar lender must give you a written disclosure statement before you are locked into a loan agreement. This document must clearly show:
| Required Disclosure | What It Means |
| Annual Percentage Rate (APR) | The true yearly cost of borrowing, including fees |
| Finance Charge | Total dollar amount the loan will cost you |
| Amount Financed | The actual loan principal being extended to you |
| Total of Payments | What you will have paid by the end of the loan |
| Payment Schedule | How many payments, how much, and when |
| Prepayment Penalties | Whether you are charged for paying off early |
| Late Fees | What happens if you miss a payment |
This is not a formality. Every single one of these items must be accurate. If the numbers are wrong or fees are omitted, that is a potential TILA violation with real legal consequences.
How Does TILA Apply Specifically to Solar Loans?
Solar loans are consumer credit products, which means they fall under TILA’s jurisdiction just like a car loan or personal loan. The law applies to solar loans under the current exemption threshold, which was adjusted to $71,900 as of January 1, 2025.
Loans above that threshold are not automatically required to receive a standard TILA disclosure form, which creates a gap that has left some homeowners without the protections they deserve.
For loans secured by your home (such as those tied to a home equity line), TILA also provides a three-day right of rescission, meaning you can cancel the agreement without penalty within three business days of signing.
What About Dealer Fees in Solar Loans?
This is where things get complicated for many solar customers. A large portion of TILA-related complaints in the solar industry involve what are called “dealer fees.” These are markups that solar installers pass on to lenders, which are then quietly rolled into the homeowner’s loan balance.
In a lawsuit filed in March 2024, the Minnesota Attorney General sued four major solar lending companies, alleging they collected $35 million in hidden fees on nearly 5,000 solar loans in that state alone.
The hidden fees reportedly inflated what borrowers owed by 15% to 30%. Similar concerns have been raised by the Consumer Financial Protection Bureau (CFPB), which issued a report in 2024 finding that some residential solar lenders were misleading homeowners by cramming markup fees into loan balances without proper disclosure.
According to the Center for Responsible Lending, a borrower might be offered what looks like a 1.99% interest rate on a $30,000 loan without ever being told the actual installation cost was only $24,000, with the lender keeping the $6,000 difference as an undisclosed fee. That kind of omission is exactly what TILA was designed to prevent.
What Is the Right of Rescission and Does It Apply to My Solar Loan?
The right of rescission is one of the most powerful protections under TILA. It gives you the right to cancel a loan without any financial penalty, and it is especially important for homeowners who felt pressured during a solar sales pitch.
Standard 3-Day Window
For loans secured by your primary residence, TILA gives you three business days after signing to cancel for any reason. Saturdays count as business days under this rule. Sundays and federal holidays do not. To exercise this right, you must submit a written cancellation notice to the lender before midnight on the third business day.
This three-day window is your clearest and easiest exit. You do not need a reason. You simply notify the lender in writing that you are rescinding.
Extended 3-Year Window
Here is something most homeowners are never told: if a lender failed to give you accurate TILA disclosures, that three-day window can extend to three full years. The extended right of rescission under TILA Section 1635(f) is triggered when the lender omitted or misstated any of the following:
- The correct APR
- The correct finance charge
- The total amount financed
- A clear notice of your right to rescind
Given how common hidden dealer fees are in the solar industry, many solar loan agreements may contain TILA violations that open the door to this extended cancellation right.
The U.S. Supreme Court confirmed in Jesinoski v. Countrywide Home Loans that a borrower only needs to send written notice of rescission within that three-year window, not necessarily file a lawsuit.
Common TILA Violations in Solar Loans
Not every solar lender operates this way, but the violations that do occur tend to follow recognizable patterns. Here are the most common ones to watch for in your own paperwork:
- Hidden dealer fees: Fees paid by the lender to the installer are folded into your loan balance without being disclosed as a financing cost.
- Inflated system pricing: The solar company quotes a price that is 10% to 30% higher than the actual system cost to cover the dealer fee, making the loan balance artificially large.
- Incorrect APR: When hidden fees are not included in the finance charge calculation, the disclosed APR is lower than the true cost of borrowing.
- Missing or unclear right-to-cancel notice: TILA requires lenders to provide two copies of a written notice explaining your right to rescind. If you never received this, your rescission period may still be open.
- Unsigned or altered disclosures: Disclosure documents that were signed after the loan closed, or that were altered without your knowledge, are also violations.
Does TILA Apply to Solar Leases and PPAs?
TILA applies to credit transactions, meaning loans where you are borrowing money. Solar leases and power purchase agreements (PPAs) are structured differently, as you are not technically borrowing money but rather agreeing to buy electricity or lease equipment.
These arrangements are generally not covered by TILA. However, they may be subject to other consumer protection laws, FTC regulations, and state-level cooling-off rules.
If you are unsure what type of agreement you signed, look at the paperwork. If there is a loan amount, an APR, or a finance charge listed, it is almost certainly a loan covered by TILA.
What Should You Do If You Suspect a TILA Violation?
If something about your solar loan feels off, the first step is to gather your documents. Pull together your loan agreement, the TILA disclosure statement (if you received one), the sales proposal, and any emails or texts from the installer. Then check whether the APR and total loan amount in the disclosure actually match what you were told the system would cost.
You can also file a complaint with the CFPB at consumerfinance.gov, which tracks patterns of violations across lenders.
Solar Equity Solutions is accredited by the Better Business Bureau and has helped over 5,000 homeowners review and cancel solar contracts across all major solar companies. Our team has deep experience identifying TILA violations and other contractual issues that give homeowners a legal basis to exit agreements.
Frequently Asked Questions
Does TILA cover all solar loans?
TILA covers most solar loans under $71,900 (as of 2025). Loans above that threshold may not require a standard TILA disclosure form, which is a significant gap in consumer protection.
What is a TILA disclosure statement?
It is a required written document from your lender listing the APR, total amount financed, finance charge, payment schedule, and other key loan terms before you are bound to the agreement.
Can I cancel my solar loan after the 3 days are up?
Possibly. If your lender failed to provide accurate disclosures, your right to rescind may extend up to three years from when the loan was consummated.
What is a dealer fee in a solar loan?
A dealer fee is a markup a solar installer charges the lender, which is often rolled into your loan balance without being clearly disclosed. These fees can add 15% to 30% to your total loan cost.
What happens if a lender violates TILA?
Consequences can include the right to rescind the loan, statutory damages, attorney fees, and in some cases class-action liability for the lender.
Is my solar lease covered by TILA?
No. TILA covers credit transactions (loans). Solar leases and PPAs are not loans, so they fall outside TILA’s scope, though other consumer protection laws may apply.
How do I know if my solar loan has a TILA violation?
Compare the total loan amount in your disclosure with the actual installation cost you were quoted. A large gap often signals undisclosed fees. An attorney or specialized firm can review your documents for specific violations.
Disclaimer: This content is for informational purposes only and does not constitute legal advice. Results vary by case. Consult a licensed attorney for advice specific to your situation.