In order to minimize the monthly payments made by the homeowner, several financing providers such as Sungage Financial, Enerbank and Green Sky offer a loan bundle: a 12 month loan against the Investment Tax Credit (30% of the project's cost) and a longer term loan for the balance of the project cost (70%). The two loans overlap.
From the homeowner's perspective, she applies her ITC tax credit to "buy down" (reduce the principal) of the loan, and then she continues making monthly payments for the duration of the loan. Check the requirements of your lender - if she doesn't buy down the loan her monthly payments may significantly increase. This is how to model this loan structure:
- Go to your account Database. Click on Financing Products, then Add Financing Product. Give your template a descriptive name. Click Create.
- Click Add Loan.
- Give your loan a descriptive name that you will later be able to understand.
- Principal Percentage should be set to 70%. Loan Type should be set to Mortgage-Style.
- Input your Dealer Fee, Interest Rate, and the Duration of the loan. Click OK.
- Again, click on Add Loan but this time select Bullet. Give your loan a descriptive name.
- Principal Percentage should be set to 30% (this is the amount of the Federal Tax Credit).
- Input your Dealer Fee, Interest Rate, and the Duration of the loan. Duration will usually be 12 to 18 months - whenever the 30% payment is due.
- You may choose to lock your settings, so other users cannot change the parameters you have set.
- Click OK.