What is Solar Loan?
A solar loan pays for a solar power system that cuts your electricity bill. For a home, this is usually a rooftop plant of 2 to 5 kW costing roughly ₹1.2 lakh to ₹3.5 lakh before subsidy. For a shop, school or small factory, the plant can be larger and the finance resembles a business loan. The system generates power for 20 to 25 years, so the loan is repaid out of bill savings over several years.
The most important fact for a household is the government subsidy. Under the PM Surya Ghar Muft Bijli Yojana, eligible residential consumers can receive central financial assistance on rooftop solar, with a ceiling of ₹78,000 for a system of 3 kW and above. The subsidy is credited to your bank account after installation and inspection, which means you often have to fund the full cost first, and a loan can bridge that gap.
Solar Loan at a glance
| Typical loan amount | Roughly ₹1 lakh to ₹25 lakh, higher for commercial plants |
|---|---|
| Tenure | Usually 3 to 10 years, longer for some larger or secured loans |
| Indicative interest rate | Roughly 7% to 15% a year, depending on lender, scheme linkage and profile |
| Processing fee | Roughly 0% to 2% of the loan amount, plus 18% GST |
| Security / collateral | Often none for small residential loans, property or hypothecation of the plant for larger ones |
| Typical time to disbursal | Roughly 1 to 3 weeks, plus installation time |
| Loan type | Secured or unsecured |
Indicative ranges based on general market practice in India. Your offer will differ. Last reviewed 3 October 2026.
Who should consider Solar Loan?
- Homeowners with a shadow-free roof and monthly electricity bills high enough to justify a 2 to 5 kW rooftop plant.
- Housing societies and apartment owners installing solar for common areas such as lifts and pumps.
- Shop owners and small manufacturers who run daytime loads and want to cut commercial power costs.
- Institutions, such as schools and clinics, that use power during daylight hours and own their buildings.
Solar Loan eligibility criteria
| Criterion | What lenders typically look for |
|---|---|
| Ownership | You normally need to own the roof or have the owner's consent. Tenants usually cannot take a rooftop solar loan on their own. |
| Electricity connection | A valid grid connection in your name, with a recent bill. Net metering approval from the local distribution company is needed. |
| Age | Typically 21 to 65 years, depending on the lender and the end of the loan tenure. |
| Income and credit | A steady income and a reasonable credit score. Small residential loans may be unsecured and decided on the credit profile. |
| Roof suitability | Adequate shadow-free area, roughly 10 square metres per kW, and a structure that can bear the load. |
| Installer | For subsidy, the plant is generally installed by a vendor listed on the national portal. Check the scheme rules before choosing. |
Documents required for Solar Loan
- PAN card and Aadhaar card
- Latest electricity bill and consumer number
- Proof of roof ownership, such as a sale deed or property tax receipt
- Income proof, such as salary slips or an income tax return
- Last 6 months of bank statements
- Installer quotation and system specification
- Net metering application or approval copy
How does Solar Loan work, step by step?
- Size the system from your bills. Check 12 months of units used. A rule of thumb is that a 1 kW system produces roughly 4 to 5 units a day, though output varies by city and roof.
- Register and apply for subsidy. For residential rooftop solar, you register on the national rooftop solar portal, choose a listed vendor and apply for the central subsidy before installation.
- Get quotes and a loan sanction. Compare quotes from listed vendors. Apply to lenders for a loan against the net cost. Some banks offer a loan product linked to the scheme.
- Install and inspect. The vendor installs the plant, and the distribution company installs a net meter and inspects. Commissioning is confirmed on the portal.
- Receive the subsidy. After commissioning and a bank account check, the central subsidy is credited directly to your account. This often takes a few weeks.
- Repay and track savings. Repay instalments monthly. Savings on your electricity bill, and any export credit under net metering, offset part of the instalment.
Estimate your Solar Loan EMI
Example values only. Replace them with the figures in your own offer.
Reducing-balance method. Excludes processing fees, GST, insurance and other charges.
Solar Loan interest rate, fees and charges
The cost of a solar loan is the interest, a processing fee with GST, and possible charges for valuation or insurance. The subsidy reduces your net cost but arrives after installation, so you may carry interest on the subsidy amount for some weeks. Compare the instalment against your expected monthly bill savings before you decide on the system size.
- Interest
- Scheme-linked or green loans may carry lower rates than a personal loan. Ask whether the rate is fixed or floating.
- Processing fee
- Usually a small percentage of the loan with 18% GST. Some lenders waive it for scheme-linked loans.
- Gap between payment and subsidy
- The subsidy is credited after commissioning. Until then you carry interest on the amount, so ask about a bridge option.
- Insurance and maintenance
- Plants need cleaning and an inverter replacement after about 8 to 12 years. Budget for these and for insurance.
- Net metering and grid charges
- Some distribution companies charge fees for meters and approvals, and policies on export credit vary by state.
Indicative rates as of October 2026. Figures are market ranges, not offers, and are reviewed every 90 days (next review January 2027). Your rate is fixed by the lender in the sanction letter and Key Fact Statement.
Worked example: what this loan really costs
Illustration for a 5 kW rooftop solar system, using mid-range figures seen in the market as of October 2026. Your lender's Key Fact Statement will show your own numbers.
| Loan amount | ₹5,00,000 |
|---|---|
| Interest rate (reducing balance) | 10.0% a year |
| Tenure | 60 months |
| Monthly EMI | ₹10,624 |
| Total interest paid | ₹1,37,411 |
| Total repaid | ₹6,37,411 |
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), with r the monthly rate. Processing fees, GST and insurance are extra; the annual percentage rate in the Key Fact Statement includes them. Check the figures in our Specialized Loans EMI calculator.
Pros and cons of Solar Loan
Advantages
- Cuts electricity bills for many years, which helps repay the loan.
- Central subsidy for eligible residential systems lowers the net cost.
- Small residential loans are often available without collateral.
- Solar systems carry long performance warranties and low running cost.
Limitations
- Subsidy comes after installation, so you must fund the full cost first.
- Savings depend on roof, sunlight, usage pattern and state net-metering rules.
- Poor installers or low-grade panels reduce output and savings.
- A shaded or weak roof can make the project uneconomical.
Mistakes to avoid with Solar Loan
- Oversizing the system
- A plant bigger than your usage may earn little extra from export credit. Size it to your average monthly consumption and your roof space.
- Choosing an installer on price alone
- A very low quote may use weaker panels, inverters or structure. Check the vendor's listing, warranty, past installations and after-sales service.
- Assuming the subsidy is automatic
- Subsidy depends on scheme rules, eligibility, a listed vendor and approvals. Confirm the current rules on the official portal before you commit.
- Ignoring payback maths
- Compare the monthly instalment with likely bill savings. If the instalment is far above savings, consider a smaller system or a longer tenure.
Solar Loan compared with similar loans
- Solar Loan vs Green Loan
- A green loan is a broader category for energy-efficient and environmentally friendly projects, such as efficient appliances, electric mobility or water saving. A solar loan is narrower, tied to a power generation system, and linked to a subsidy and net metering in many cases.
- Solar Loan vs Renewable Energy Loan
- A renewable energy loan is usually a larger, commercial facility for solar parks, wind or biomass, assessed on project cash flows. A solar loan for a home or shop is smaller, simpler and often unsecured or lightly secured, and it may use scheme-linked terms.
- Solar Loan vs Home Improvement Loan
- A home improvement loan funds renovation and repairs and is usually secured on the property with a longer tenure. A solar loan funds a power-generating asset that cuts bills, so lenders may price it differently and the savings help repay it.
Rules and regulations that apply to Solar Loan
PM Surya Ghar Muft Bijli Yojana offers central financial assistance on residential rooftop solar, up to ₹78,000 for systems of 3 kW and above, applied for on the national portal through a listed vendor. Subsidy rules and loan terms can change, so check the official portal and the Key Fact Statement from the lender.
Rules that protect you, with the source
- Key Fact Statement. For retail and MSME loans sanctioned from 1 October 2024, the lender must give you a KFS with the annual percentage rate and a repayment schedule before you sign, and cannot charge a fee that is not in it. RBI circular, 15 April 2024.
- Pre-payment charges. For floating-rate loans to individuals for non-business purposes sanctioned or renewed from 1 January 2026, no pre-payment or foreclosure charge can be levied. RBI Directions, 2 July 2025.
- Free credit report. Every credit bureau must give you one free full report with score each calendar year. RBI notification, 1 September 2016.
- Complaints. If the lender does not resolve a complaint within 30 days, you can go to the RBI Ombudsman free of charge. Integrated Ombudsman Scheme, 2021 · file at cms.rbi.org.in.
Solar Loan: frequently asked questions
How much subsidy do I get for rooftop solar in India?
Under PM Surya Ghar, eligible residential consumers can get central financial assistance with a maximum of ₹78,000 for a system of 3 kW or more. Smaller systems get a lower amount. You must apply on the national portal and use a listed vendor, so check current rules there.
Can I get a solar loan without collateral?
Often yes for small residential systems. Several lenders offer collateral-free or lightly secured loans for rooftop solar, based on your credit profile and income. Larger or commercial projects usually need security such as property or hypothecation of the plant. Approval depends on lender assessment.
Is the subsidy paid before or after installation?
After. The subsidy is credited to your bank account once the plant is installed, inspected and commissioned. This means you or your lender fund the full cost first, so ask whether the loan can cover the subsidy amount until it is received.
What is the interest rate on a solar loan?
Roughly 7% to 15% a year, depending on the lender, whether the loan is linked to a scheme, and your profile. Some scheme-linked products are priced lower than a personal loan. Check the annual percentage rate in the Key Fact Statement.
How long does it take to pay back a rooftop solar system?
Payback depends on your tariff, usage, sunlight, system cost and the subsidy you receive, so it differs from home to home. Estimate it from your actual bills and the vendor's expected output. A loan stretches the repayment, and bill savings offset the instalments over time.
Do I need net metering for a solar loan?
For a grid-connected rooftop system, yes. Net metering lets you export extra power and earn credit, and it is generally required for subsidy and for most lenders. Your distribution company must approve and install the meter, and the rules differ by state.
Can a tenant or flat owner take a solar loan?
A tenant usually cannot, because the roof is not theirs. A flat owner may need society consent, and shared roof rights vary. Housing societies can apply for group solar for common loads. Check scheme rules and get written permission before you apply.
Solar Loan in your city
Local guidance, documents and an EMI calculator for 1461 cities across India.
Official sources and further reading
These guides are written from Reserve Bank of India rules and official scheme pages. Rules, rates and scheme terms change, so check the current position on these sites and in your lender's Key Fact Statement before you apply.
- Government announcement: PM Surya Ghar Muft Bijli Yojana. The rooftop solar scheme announcement from the Prime Minister's Office.
- RBI: Key Facts Statement (KFS) for loans and advances. The Reserve Bank of India notification that tells lenders to give every borrower a plain-language statement of the full cost of a loan.
- RBI Complaint Management System. Where to take a complaint against a bank, NBFC or other regulated lender if the lender does not resolve it.
- RBI (Pre-payment Charges on Loans) Directions, 2025. Bars pre-payment charges on floating-rate loans taken by individuals for non-business purposes, for loans sanctioned or renewed from 1 January 2026.
- Reserve Bank - Integrated Ombudsman Scheme, 2021. The single complaint scheme for customers of banks, NBFCs and other RBI-regulated lenders.
- RBI: Free Annual Credit Report to Individuals. Credit bureaus must give you one free full credit report with score every calendar year.
- RBI Financial Education. Consumer guidance from the Reserve Bank of India on borrowing, fraud and your rights as a customer.
Edited by Hemant Kumar. Rates on this site are indicative ranges, not offers.
This page is general information, not personalised financial advice and not an offer. Rates and terms shown are indicative and vary by lender and applicant. Verify with the lender and read the Key Fact Statement before you sign.