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What Is the Dealer Fee in Solar Panel Financing?
If you've financed your solar panel system, you might have unknowingly paid a dealer fee—a hidden charge that can cost you thousands of dollars. But what exactly is a dealer fee, and why is it important in the context of solar panel lawsuits?
Understanding the Dealer Fee in Solar Loans
A dealer fee (sometimes called a "program fee") is an extra charge that lenders impose when financing solar panels. While many homeowners believe they’re only paying for the solar system itself, this hidden fee inflates the total cost of the loan—often without the borrower's full understanding.
Lenders claim this fee covers the cost of offering "special financing programs," but in reality, it's a kickback to the solar company for bringing them new customers. This practice is widespread in the industry and can significantly increase your loan amount without you realizing it.
How the Dealer Fee Works
Solar companies set up financing deals with lenders who offer loans to homeowners.
The lender adds a dealer fee—usually 10% to 30% of the total loan amount—which gets paid directly to the solar company.
The homeowner ends up borrowing more than they expected because the dealer fee is rolled into the total loan balance.
For example, if your solar system was priced at $30,000 and the dealer fee was 20%, you wouldn’t just be financing $30,000—you’d actually be financing $36,000 ($30,000 + $6,000 dealer fee). This means you're paying interest on money that never actually went toward your solar panels.
Why Is the Dealer Fee a Problem?
Many homeowners don’t realize they’ve been charged a dealer fee because it’s not clearly disclosed in their loan documents. Some key issues with dealer fees include:
Hidden Costs – Lenders often bury dealer fees deep in contracts, making them hard to spot.
Inflated Loan Balances – You might be financing thousands of dollars more than the actual price of your solar system.
Higher Interest Payments – Since the dealer fee is part of the loan, you end up paying interest on that extra amount.
Potential Legal Violations – In some cases, lenders fail to properly disclose dealer fees, which could be a violation of consumer protection laws.
Are Lenders Liable for Dealer Fees?
Lenders often try to avoid liability by claiming they were just financing the transaction, but under the Federal Trade Commission (FTC) Holder Rule, they may be responsible for deceptive practices by the solar company.
This means that if your solar installer misrepresented the cost of your system or failed to disclose the dealer fee, the lender could be held accountable.
What Can You Do if You Were Charged a Dealer Fee?
If you suspect you were charged a dealer fee without full disclosure, here’s what you can do:
Review Your Loan Documents – Look for terms like "dealer fee," "program fee," or "loan origination fee."
Request a Loan Breakdown – Ask your lender for a detailed statement of all charges.
Consult a Consumer Attorney – A lawyer specializing in solar panel lawsuits can help determine if you have a case against your lender.
Final Thoughts
Dealer fees are one of the most common hidden costs in solar financing, and many homeowners are completely unaware they’ve paid thousands more than necessary. If you financed your solar panels and suspect a dealer fee was added without clear disclosure, you may have legal options to fight back.
If you have questions about your solar loan or potential legal claims, contact us today for a free consultation. You shouldn’t have to pay for a system that was misrepresented to you.
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I felt completely stuck when Encor went out of business, leaving me with an unfinished solar system that didn’t work, failed inspections, and a loan I still had to pay. On top of that, they misled me about tax credits and savings, and I ended up paying more in taxes and insurance instead. Prevost Law Firm stepped in and took care of everything. Their team handled my case with professionalism and compassion, and I’m so grateful for the outcome. If you're struggling with solar issues, you need to call them. (Cara J.)
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My experience with Encor Solar was a disaster. They installed a system that didn’t work, used an unlicensed subcontractor, voided my roof warranty, and lied about the need for batteries during power outages. When they went out of business, they left me with an unfinished system and no way to fix the mess they created. Prevost Law Firm was amazing—taking on my case and delivering results that exceeded my expectations. They are true advocates for homeowners, and I’m so grateful for their help. If you're facing a similar situation, I can’t recommend them enough! (John S.)
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We can’t thank Prevost Law Firm enough for what they’ve done for us. My wife and I felt utterly defeated and trapped by the $73,590 loan for a solar panel system that never even worked. Encor, the installer, went out of business before the system passed inspection, but Solar Mosaic still demanded we pay for it. As disabled homeowners, we felt taken advantage of and didn’t know where to turn.
From the first phone call, their team made us feel like we weren’t alone in this fight. They listened to our story, fought tirelessly on our behalf, and never gave up until they got results. Thanks to them, our $73,590 loan was completely canceled, and we were refunded every single dollar of the $28,493 we had already paid into the loan. Best of all, we got to keep the solar panels for free!
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Nothing herein is intended, and does not, create an attorney client relationship and is for informational purposes only. The Prevost law firm is licensed in Texas and is licensed to practice law in all Texas state courts and in multiple Federal Courts and Arbitration in 46 states. Solar sales are governed by both state and federal law. The attorney client relationship will only be created after the parties enter into a signed letter of representation.