How to set up a LOAN payment option

You are able to set up and customize the terms of any loan payment option in the Control zone of OpenSolar (Control > Pricing & Payments > Payment Options)

Creating a Loan Option

Firstly, to create a loan option, click within Payment Options.

• Title: Give your payment option a title.

• Note: This is how your payment option will appear in the proposal.

• Auto-Apply: Choose whether you want this payment option to be offered with each proposal.  You can always override this preference for a particular project from the Studio zone.

• Description: Include a clear description of the loan in this space for your reference as you manage payment options in the future.

Loan Parameters

Required Parameters

• Annual Interest Rate
• Enter the Annual Interest Rate (%) for your loan.
• Loan Term
• Enter the Loan Term in periods (this defaults to months, so a 10 year loan would be 120 months, a 20 year loan would be 240 months, etc, although you configure the length of a period in “Advanced Settings”)

Optional Parameters

Note that all loans are required to have an Annual Interest Rate and a Loan Term - the remaining parameters are optional, and only need to be entered if they apply to the particular solar loan you are using. To include information under each of these sections, toggle the section on.

Prepayment

If proposed financing assumes a prepayment will be paid (i.e. a single, large payment, often equal to the value of the ITC, typically due by month 12 or 18) activate Prepayment functionality, and configure parameters as appropriate.

Note: For an incentive to be included as a prepayment, you must first edit the incentive and ensure "Use for Loan Pay down" is toggled on.

• Solar-Style Loan vs. Mortgage-Style Loan.  All solar loans take one of two approaches to required prepayments.  Use the radio buttons to choose between a Solar-Style Loan and a Mortgage-Style Loan.  

• Solar-Style Loans start a low monthly payment and remain at that loan payment for the life of the loan, if the required prepayment is made on time.  If that prepayment is not made on time, the monthly payments increase for the rest of the term of the loan.
• Mortgage-Style Loans start with a relatively high monthly payment and that payments falls if the required prepayment is made on time.  If that prepayment is not made on time, the monthly payment remains high for the rest of the term of the loan.

• Prepayment Amount.  

• Customer-Facing Incentives: Some loans require that all customer-facing incentives (e.g. the Investment Tax Credit) be used to prepay the loan.  If you select this option, the system will automatically calculate the required prepayment based on the incentives associated with the project.  
• Percentage of Loan Amount: Other loans require that a fixed percentage of the loan amount be prepaid.  If you select this option, you must also set the Prepayment % to the appropriate level in the adjacent field.

• Prepayment Month.

• Set the month of the loan in which the required prepayment is due.  (Typically, loans require the prepayment by month 12 or 18, but there is significant variation across the industry.)

Promotional Period

Some loans offer a short promotional period at the start of the loan with more favorable terms than the overall loan.  You can add any or all of the following features to each loan.

• No Payment Term.

• During a No Payment Term, no payments are due from the customer but interest accrues on the loan.  
• No Payment Terms are always assumed to start with the first period of the loan and run for the number of periods that you set.

• Interest Only Term.

• During an Interest Only Term, the customer has a lower monthly payment, as they are only responsible for paying for the interest that accrues in each period, not for making any payments against the loan principal.  
• Interest Only Terms are always assumed to start with either the first period of the loan, or the first period after the No Payment Term (if there is one) ends, and run for the number of periods that you set.

• No Interest Term.

• During a No Interest Term, no interest occurs on the loan balance, although the customer may still be required to make regular monthly payments.
• No Interest Terms are always assumed to start in the first period of the loan, and run for the number of periods that you set.  (No Interest Terms can run at the same time as a No Payment or Interest Only Term.)

• Notes

• If there is a Prepayment requirement and a promotional period, the “No Payment” and “Interest Only” periods must end before any Prepayment is due.

Dealer Fee

If you are required to pay the financing company a fee to offer a particular loan to your customer, and you would like to build that fee into your system pricing, so you collect the same revenue, net of dealer fees, as you would on a cash project, enter the dealer fee amount here.

• % of Loan Amount

• Enter the value here if the Dealer Fee is calculated as a percentage of the loan amount.

• Fixed Amount

• Enter the value here if the Dealer Fee is a fixed amount per project.

Down Payment

If you will be collecting a portion of the system price as a cash payment at contract signing, specify the amount here

• % of System Cost

• Enter the % of System Cost that you will be collecting as a down payment (and therefore not financing).

• Minimum

• Enter a value here IF there is a minimum amount you always want to collect, regardless of system cost.

• Maximum

• Enter a value here IF there is a maximum amount you always want to collect, regardless of system cost.  This can be useful in places where contracting law prohibits contractors from collecting more than a certain amount (e.g. $1000) prior to completing work.

 Advanced Settings

• Loan Frequency

• If the loan has periods that are longer or shorter than a month, configure that here.

• Collect Signatures

• If you do not want to prompt the customer to electronically sign your contract in the OpenSolar tool, you can disable that feature here.