Here’s a Bright Loan Idea

SACU unveils solar home improvement loan program.

February 24, 2011

Harnessing the sun’s power to reduce energy expenses and lessen reliance on fossil fuels has become an affordable option for many Texas residents, thanks to a new solar home improvement loan program from SACU in San Antonio.

The $2.9 billion asset credit union partnered with Solar San Antonio’s “Bring Solar Home” initiative, which educates the public about the benefits of solar energy and how to install solar systems.

The high cost of these systems—up to $30,000—has prevented many consumers from implementing them.

Enter SACU. “We approached Solar San Antonio and let them know we had a home improvement loan product and could help people with financing,” explains Laura Doremus, SACU’s business manager for residential lending/retail services.

A solar home improvement loan is a residential mortgage loan that’s available for solar arrays, solar water heaters, or any improvement where energy is generated through a solar system.

Subscribe to Credit Union MagazineThe average loan size is about $23,000, and terms range from three to 20 years. The average term is 10 years.

The length of term determines the interest rate. The rate for a three-year term currently is 4.99%; 10 years, 5.75%; and 20 years, 7%.

SACU has funded 12 solar loans since launching the program in September. About the same number of loans have been approved and await funding.

Members can apply a utility company rebate and federal tax credits to the loan principal and the credit union will reamortize the loan, lowering the payment amount.

The initial reaction to the program was overwhelmingly positive.

“There will be continued interest,” Doremus says. “The cost of these systems is a big consideration. But with the rebates that are available and our financing, people who plan to stay in their homes long-term will follow through in purchasing them. There’s a good amount of interest out there.”

One challenge in offering these loans has been answering members’ complicated questions about solar systems.

But most borrowers have done their research and are well-versed in the systems, Doremus says.

Her advice for other credit unions considering making these types of loans? “Look at it as any other home improvement loan. Consider that these systems add value to the property.

“We started small and partnered with a local nonprofit, which gave us instant credibility and market access,” Doremus continues. “We’re looking forward to even greater success during phase two of the project, which rolls out in March.”

Energy efficiency loan

Robins Federal Credit Union, Warner Robins, Ga., also helps members improve their homes’ energy efficiency.

It offers energy efficiency loans in partnership with Flint Energies that can be used to pay for insulation, heating and cooling equipment that’s Energy Star® qualified, Energy Star windows and doors, envelope sealing, duct sealing and insulation, and energy-efficient appliances.

Members of the $1.4 billion asset credit union start the process by scheduling a free home energy audit, selecting improvements, and getting quotes for the upgrades.

Loan amounts range from $1,000 to $7,500 at 4.99%. Terms go up to 60 months.

Photo of the sun by NASA