A dealer fee is a charge some lenders add to cover the cost of offering their loan product. Rather than billing the installer separately, the lender builds the fee into the loan by increasing the starting principal. The homeowner ends up financing a slightly higher amount than the actual system cost.
Dealer fees are expressed as a percentage and typically range from 1% to 30%, depending on the lender and product.
In this article, we’ll cover:
- How Aurora calculates the dealer fee
- Flat fee vs. dealer fee
- How to add or change the dealer fee
- Incentives apply to dealer fee
How Aurora calculates the dealer fee
When a dealer fee is configured, Aurora uses the following formula to determine the loan principal:
Loan principal = System cost ÷ (1 − Dealer fee %)
Example: A $20,000 system with a 5% dealer fee:
$20,000 ÷ (1 − 0.05) = $21,052.63
The homeowner's monthly payments are based on this higher principal, not the original system cost. Aurora handles this calculation automatically when you enter the dealer fee percentage.
Flat fee vs. dealer fee
All loan types also include a Flat fee field — a fixed dollar amount added directly to the loan principal. You can use a flat fee alone, a dealer fee alone, or both together. Both are factored into the principal Aurora uses to calculate monthly payments.
How to add or change the dealer fee
- Go to Database > Financing products.
- Select an existing loan product, or click Add financing product to create a new one.
- Open the loan configuration and locate the Dealer fee field.
- Enter the dealer fee percentage provided by your lender.
Incentives apply to dealer fee
Below the dealer fee field is the Incentives apply to dealer fee toggle, which is off by default.
When on: The dealer fee is added to the system cost before Aurora calculates incentives (such as the federal ITC) and the tax basis. Use this when the dealer fee is considered part of the total project cost for tax purposes.
When off (default): Incentives are calculated on the base system cost only, excluding the dealer fee.
⚠️ The correct setting depends on your lender’s terms and how the dealer fee is treated for ITC eligibility. If you’re unsure, consult your lender or a tax professional.