In some loan structures offered by financing companies like Green Sky, Enerbank and Dividend Solar, the homeowner is not required to make any payments (neither interest nor principal) for the first term of their loan, however she is being charged interest which she will have to pay later. Here is how to model this type of loan:
- Go to your account Settings. Click on Financing Templates then Create New Template. Give your template a descriptive name that you will later be able to understand.
- In the 'Basic Information' section, click on Loan.
- Click on the pencil icon to input your 'Project Useful Life' and your 'Discount Rate' (we chose 25 years and 3.0%).
- Input your 'Degradation Factor', 'Inverter Replacement Cost' and 'Inverter Life' (we chose 0.5%, $.35/W and 13 years).
- Input your tax rates (we chose 0%). Please contact a tax attorney for more information on whether your solar project's returns should be taxed. In our experience, in the US residential solar returns are never taxed.
- Add your Incentives.
- Click Add Loan and select No Payment. Give your loan a descriptive name that you will later be able to understand.
- 'Principal' percentage should be: 100% - Down Payment%. So if the homeowner is putting no money down, this should be 100%. If the homeowner is putting 20% down, this should be 80% (we chose 100%).
- Input your 'Dealer Fee', 'Interest Rate', and the 'Duration' of the loan (we chose 4.5%, 4.9% and 16 months).
In this type of a loan structure, although the homeowner is not making any payments for the first 16 months, interest is accruing, so the starting balance in the second period is higher than the original loan amount.
- Input your 'Interest Rate', and 'Duration' for the second term of the loan (we chose 7.99%, 224 months). Click OK. Read the summary at the bottom of the pop up box to make sure your loan description is accurate.
- Lock your immutable fields.
We highly recommend that you lock fields that will not change between different designs. This will save your team time and reduce errors.