PALO ALTO, Calif. - While the economy here has been anything but sunny, one CU here has seen the light, in the form of loans for residential solar power systems.
Addison Avenue FCU has booked 157 "solar loans" for $5.4 million, plus six real estate-secured loans for solar systems totaling $379,000. There are more than 110 additional loans in the pipeline, according to Scott Pellegrini, product manager for the credit union.
The offering has been popular in this eco-conscious community, but members also like that they have a choice of a signature, home equity or mortgage loan to pay for the system, the CU said.
"We offer a full suite of mortgage products, including HELOCs, but the solar loan itself is an unsecured loan," he told Credit Union Journal. "In today's economy, many homeowners might not have equity available in their homes to accommodate a new solar installation, so we felt it was important to offer our members options."
Addison Avenue typically funds the solar loan the same day a member applies, while a mortgage loan may take several weeks to close, he added.
A solar loan has several term options, including a full-term option on a maximum of 60 months. For installations of more than $20,000, there are two extended-term options which make for lower monthly payments. The extended term options have a balloon payment after 60 months, but the payments are calculated over 120 or 180 months.
"There are no penalties to pay off early and we will encourage members to explore the mortgage option when it makes the most sense for them," he said.
The solar system itself is not taken as collateral and Addison Avenue does not place a lien on the equipment, "as we are not in position to start tearing equipment off peoples' roofs," he quipped. "We want to see how people behave with these loans, and so far, so good."
The extended payment terms were designed to give the member a payment comparable to their normal electric bill so that, in theory, their monthly outlay doesn't change.
Addison Avenue has a partnership with SunPower, a local solar company that has relationships with two of its SEGs. Pellegrini said the CU accepts referrals from SunPower, but members are free to use any solar company. Members receive a rebate of $0.30 per watt (up to $1,500) on the purchase of a SunPower residential system and they may be eligible for a 30% federal tax credit.
"We have started to partner with local dealers that partner with SunPower to do brown-bag seminars," Pellegrini said. "They teach a group of people at one time the different equipment options available, how long it takes to install and financing options. The seminars are less about the loan itself and more about the program."
The feedback Addison Avenue is receiving from SunPower and its members is "people are pleased we are offering it and the results are showing it," he declared. "And, it has helped bring in new business. At the end of June, we opened up an additional 64 accounts, varying from checking to auto loans to Visa cards. People have seen the other benefits we have to offer and have come on board."
