Should you finance solar with GreenSky solar loans?

If you’ve been shopping around for solar, you might be wondering about your financing options. GreenSky is one of the country’s leading solar loan providers, however, they operate a little bit differently than other lenders you might come across.

Let’s take a closer look at what GreenSky offers, how you can apply for their loans, and if they’re the right choice for financing your solar installation.

Overview of GreenSky Financing solar loans

GreenSky is a popular home improvement financing company, but they don’t work quite like traditional loan lenders. In fact, GreenSky isn’t a loan lender at all. GreenSky simply acts as the link between the consumer and the bank. They also give contractors the tools they need to easily offer financing options to their customers.

When you finance with GreenSky, your loan actually comes from investment banking giant, Goldman Sachs, which recently acquired Greensky. 

GreenSky provides loans of up to $100,000 with APRs ranging from 0% to 29.99% with loan terms generally between five and 12 years, but sometimes as high as 20 years. The specifics of your loan terms will vary depending on the loan plan selected and what you qualify for.

GreenSky’s loans are unsecured, meaning they don’t need to be backed up by an asset, like your house. The good news about an unsecured loan is that you won’t lose your home if you don’t make your payments. The bad news is that unsecured loans tend to have higher interest rates.

However, according to a Goldman partner, GreenSky may start offering secured loans under Goldman Sachs, depending on market conditions.

How do you get a GreenSky solar loan?

In order to get a GreenSky solar loan, you must be working with one of GreenSky’s merchant partners. A company, such as a solar installer, will become a GreenSky Merchant so they can offer their customers various GreenSky financial services.

When a solar company has a customer interested in GreenSky financing, they submit an application, which GreenSky will then send to their bank partner. The bank will then provide the customer with a loan, which the customer pays back through GreenSky’s online portal.

If approved, GreenSky will provide you with a Shopping Pass. The Shopping Pass acts as a credit card that only has access to your loan funds. Simply give your contractor your Shopping Pass to bill project costs directly to your GreenSky account.

What types of loans does GreenSky offer?

GreenSky offers three main program plans for homeowners to choose from:

• Deferred interest loans

• Payment plans/ Reduced rate plans

• Zero percent plans

Let’s take a closer look at the details of these financing options.

Deferred interest rate loans

Estimated APR Range: 17.99% to 29.99%

Loan Term: Promotional period, followed by term up to 7 years

Best for: Homeowners who don’t have the capital for the project immediately, but will have access to the full amount in the near future.

With a GreenSky deferred loan, you won’t have to pay for interest on the loan if you pay it in full before the end of the promotional period. The promotional period for GreenSky loans typically falls between 6 and 24 months.

The deferred loan will still accrue interest during that promotional period. However, if paid in full before 24 months (or whatever your promotional period is determined to be), the interest will be waived.

If you do not pay off the loan in full by the end of the promotional period, then you’ll have to pay a lump sum of the interest that accrues during the promotional period, and any that accrues after that period as well.

There are two different payment plans available with GreenSky’s deferred interest rate loan:

1. “No payments if paid in full”, which means a customer does not have payments due during the 6 to 18-month promotional period and can instead choose to pay the entire loan amount in full.

2. “With Payments” where the customer will have regular payments due throughout the promotional period.

Payment plans/reduced-rate plans

Estimated APR range: 0% to 29.99%

Loan Term: 5, 7, 8, 10, or 12 years

Best for: Homeowners who cannot pay off their loan amount in 6 to 18 months, and/or homeowners who want easy monthly budgeting.

The payment plan and reduced-rate plan loans work like how you would traditionally think of a loan. After your loan is approved, you will have fixed monthly payments during the promotional period. For the remainder of the loan terms, you would continue to make payments that would go towards interest and principal.

Zero percent plans

GreenSky provides basically no information on their 0% plans other than the fact that they have 0% APR for the entire loan term. We wouldn’t count on getting approved for this type of loan, and instead, expect something more like the other two plans.

What does it mean if a company offers you a GreenSky Split Loan?

The Split Loan structure takes your total approved credit limit and splits it into two separate loans with different sets of terms.

The first loan is a deferred interest loan that covers a portion of your project costs. This allows you to pay off the loan without interest, so long as you pay it off before the promotion period is over. Typically, the amount of this loan would be equivalent to an incentive or rebate you would be receiving, like the federal solar tax credit, so have the capital to pay off the loan in full.

The second loan would be a low, fixed interest rate loan where you would pay monthly payments over a specified term. GreenSky’s Split Loans are a popular choice among homeowners financing energy-efficient upgrades, like solar installations, because there are so many rebates and incentives available to help pay down the loan.

Pros and cons of financing with GreenSky?

Pros	Cons
Direct Payment card	Hard credit inquiry
Multiple loan plans	Vague website
Accepts co-applicants	Negative customer reviews

Pros

• Direct Payment card - Unlike a traditional loan that would be deposited into your bank account, GreenSky provides you with a Shopping Pass. This makes it easier to keep track of what you're spending so it doesn't muddy up your other finances.

• Multiple loan plans - GreenSky offers many different loan plans within their three main loan programs. This allows homeowners to choose a financing option that actually works best for them.

• Accepts co-applicants - You can have a co-applicant on your loan application to increase your chances of getting approved for a loan from GreenSky. Having a co-signer is beneficial if you have a low credit score or income.

Cons

• Hard credit inquiry - GreenSky does a hard credit pull when you apply for one of their loans, which will lower your credit score. They do not do pre-application soft credit checks.

• Negative customer reviews - GreenSky doesn't have the best customer reviews on sites like the Better Business Bureau. Some reviews have outlined problems with customer service, and getting authorization for purchases using their Shopping Pass card. You should keep in mind that some of GreenSky's negative reviews may be from homeowners upset with their contractor, not necessarily GreenSky, which can make things a little confusing

• Vague website - GreenSky's website has virtually no useful information for homeowners. You have to sift through merchant-facing documents in order to get some idea of what types of loans they offer. It's also extremely difficult to find the maximum amount they'll lend, any sort of credit requirements, or even project eligibility. In fact, there is almost no mention of solar anywhere on their site.

Applying for a GreenSky loan

Because you can only apply for a loan with GreenSky through one of their merchant partners, your installer can help guide you through the application process. But here’s a brief overview of what to expect.

1. Choose a loan plan

The installer you are working with will have a selection of loan plans that you can choose from to finance your solar system (or other home improvement project). Assess each of the options and pick the one that works right for you.

2. Submit an application

Applications can be submitted through GreenSky’s mobile app, or over the phone. In the application, you must fill out a Loan Application with information like your social security number and income, which you can find here. The company will provide the Merchant ID and the Plan Number you wish to apply for.

If you’re applying for the Split Loan option, you will need to fill out a separate form found here.

3. Complete the project

GreenSky will provide you with a copy of your Loan Documents and Loan Agreement, which includes a GreenSky Shopping Pass. The Shopping Pass is essentially a credit card that has access to your loan that your contractor can charge directly.

Paying your GreenSky loan

You will be billed the same day of the month every month until the loan is paid off. Your billing statement will include what transactions have been completed on your account by your contractor and your minimum monthly payment.

You can easily pay your GreenSky loan online here by sending a check to GreenSky or calling to make a payment via phone. GreenSky does not accept credit card payments

The payment amount differs depending on the loan amount and the loan plan you are approved for.

Should you go solar with a GreenSky solar loan?

If your installer is offering GreenSky financing options and you don't have the money to pay for a solar installation upfront, then going with GreenSky isn't a bad choice. They have a few different options for you to choose from, depending on your individual needs.

However, Greensky’s interest rates can get to be pretty high. So, if you know you aren’t going to be able to pay off the loan early and avoid that interest, you might be better off with a home equity loan or home equity line of credit. Both of these options offer lower variable interest rates, but your house is used as collateral.

Also, Greenksy’s lack of transparency on their website is a bit of a red flag for us. It makes it extremely difficult to compare financing options, or at least get a baseline idea of what to expect when it comes to GreenSky.

While we always recommend paying for a solar system in cash if possible in order to maximize your solar savings, we also recognize that this isn't a realistic option for a lot of homeowners. If you need a loan to complete your solar project and your installer offers Greensky, you should definitely consider it, but just remember there are other options out there too, like using personal loans or HELOCs for solar.

Learn more about what solar loan options are out there with our complete guide to solar loans. You can also use our solar panel calculator to understand what to expect when it comes to the costs and savings of going solar, so you can determine the best way to finance your future solar installation.