Starting a new business venture or making a capital improvement to a home or office requires sufficient financing. Residents and businesses wanting to install or expand their solar power fall under this umbrella.
There are basically two types of financing: short-term and long-term.
The primary difference is, of course, how long a period the extended credit lasts. While the two types are similar, there are some differences.
Let’s take a look at how short-term and long-term options for financing panels and solar installations apply here at Sol-Up.
Short-Term Financing
Short-term financing typically has a duration of one year or less. But depending upon credit versus obligations it might be extended for up to three years. In general, short-term credit financing is used for lower dollar amounts and are paid back more quickly. They tend to have lower risk for the finance company. The smaller firms you do business tend to have easy access to short term financing and often prefer it.
Always look at and consider the Annual Percentage Rate (APR) on financing. This tells you what percentage rate of interest you will be charged for the loan over the course of a year. By law this information must be disclosed to credit seekers. Also look for other things that impact cost, such as loan origination fees, filing fees, late charges, overdraft penalties, or refinancing options. These things make a big difference in your total cash outlay over the course of financing.
Long-Term Financing
If short-term financing is for a short time period, then it’s easy to define long-term financing. It of course extends credit over a longer period of time, typically from one to thirty years. For example, home mortgages are long-term loans that range from fifteen to thirty years. Financial institutions tend to view long-term loans as less stable and riskier, mainly because the dollar amounts involved are larger and the time of exposure to loss is much longer than with short-term financing. Because of the higher risk, banks and other long-term loan companies often obligate the loanee to carry insurance. It guarantees the borrower won’t default on the reimbursement. With all of the above being said about long-term loans, as expected, the interest rates for it are higher.
Sol-up Will Help You
At the end of the day, all you really want to know is which option is best for you! Sol-Up’s finance experts will help! You will be happy you made the right decision when you trust us to show you all the ins and out, benefits and pitfalls in financing. Your complete satisfaction is our only purpose.
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