📊 Pricing and ROI
Solar Loan vs Personal Loan vs Subsidy in India 2026: Which Financing Option Is Best for You
Best overallGreen home loan
Subsidy amountUp to Rs 78,000
Personal loan rate10.5-15% p.a.
Solar loan rate7-10% p.a.
Tax benefitSection 24(b)
The four financing options: what each one is
When considering how to pay for a rooftop solar installation in India in 2026, most homeowners have four realistic options: pay entirely from savings, take a dedicated solar loan from a bank, take a personal loan, or use the PM Surya Ghar subsidy as the anchor and finance the balance. The most effective approaches combine the subsidy with some form of loan, since the subsidy arrives after installation, not before.
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Savings only
Pay full cost upfront from own funds. Zero interest cost. Subsidy credited later as windfall.
Savings only
Pay full cost upfront from own funds. Zero interest cost. Subsidy credited later as windfall.
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Green home loan
Loan secured on property. Lowest rate. Section 24(b) tax deduction on interest. Best overall option.
Green home loan
Loan secured on property. Lowest rate. Section 24(b) tax deduction on interest. Best overall option.
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Home loan top-up
Top-up on existing home loan. Near home loan rate. Same tax benefits as green home loan.
Home loan top-up
Top-up on existing home loan. Near home loan rate. Same tax benefits as green home loan.
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Personal loan
Unsecured. Higher interest rate. Quick approval. No tax benefit. Use only if no property to pledge.
Personal loan
Unsecured. Higher interest rate. Quick approval. No tax benefit. Use only if no property to pledge.
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NBFC financing
Quick approval, some zero-cost EMI tie-ups with installers. Read terms carefully. Often higher effective rate.
NBFC financing
Quick approval, some zero-cost EMI tie-ups with installers. Read terms carefully. Often higher effective rate.
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Subsidy + savings
Pay from savings, use Rs 78,000 subsidy to replenish your account. Best if you have Rs 1.5-2L available.
Subsidy + savings
Pay from savings, use Rs 78,000 subsidy to replenish your account. Best if you have Rs 1.5-2L available.
Head-to-head comparison: real numbers for a 3 kW system
Scenario: 3 kW system costing Rs 1,40,000. PM Surya Ghar subsidy of Rs 78,000 received 90 days after commissioning. Monthly electricity saving: Rs 2,000.
| Financing Option | Rate | Monthly EMI | Total Interest Paid | Tax Saving | Net Monthly Benefit |
|---|---|---|---|---|---|
| Green home loan (5 yr) | 8.5% p.a. | Rs 2,877 | Rs 32,620 | Rs 2,380/yr | Negative until subsidy arrives |
| Home loan top-up (5 yr) | 9% p.a. | Rs 2,906 | Rs 34,360 | Rs 2,520/yr | Negative until subsidy arrives |
| Personal loan (5 yr) | 12% p.a. | Rs 3,112 | Rs 46,720 | Nil | Negative Rs 1,112/month |
| Personal loan (3 yr) | 12% p.a. | Rs 4,646 | Rs 27,256 | Nil | Negative Rs 2,646/month |
| Savings only (no EMI) | Nil | Rs 0 | Rs 0 | Nil | Positive Rs 2,000/month from day 1 |
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The subsidy changes everything. After Rs 78,000 subsidy reduces the outstanding loan principal, EMIs drop significantly. For a green home loan, the effective monthly outflow after subsidy prepayment is often lower than the electricity bill saving, making the system cash-flow positive.
SolarSahi calculation · April 2026
How subsidy interacts with your loan
Here is how the subsidy typically works with a loan. You take the full loan amount at installation. Monthly EMI payments start from Month 1. The PM Surya Ghar subsidy of up to Rs 78,000 arrives typically 2 to 5 months after commissioning, depending on your state.
1
Take full loan at installationBank disburses Rs 1,40,000 to the installer. You start EMI from Month 1. Your electricity bill savings begin immediately, partially offsetting the EMI.
2
Subsidy arrives 60-150 days laterRs 78,000 from MNRE lands in your bank account. This is a windfall against your loan principal.
3
Prepay your loan with the subsidyUse the Rs 78,000 to partially prepay your loan. Check prepayment penalty terms before doing this. Most green home loans and PM Surya Ghar-linked loans have zero or minimal prepayment penalty.
4
Reduced EMI or shorter tenureAfter prepayment of Rs 78,000 on a Rs 1,40,000 loan, only Rs 62,000 remains. EMI drops dramatically. The system becomes cash-flow positive much sooner.
Which banks offer solar-specific loans in 2026
Several nationalised and private banks have launched green home loan or solar-specific products, often with preferential rates for PM Surya Ghar applicants. Current options:
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State Bank of IndiaSolar loan under Green Home Loan. Up to Rs 10 lakh. Competitive rates for existing SBI customers.
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Bank of BarodaDedicated PM Surya Ghar linked solar financing. Check current terms at bankofbaroda.in.
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Punjab National BankActive in solar consumer lending under MNRE direction. Solar-specific product available.
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Canara BankSolar loan products for residential consumers. Verify current rates directly at branch.
For detailed rate comparisons and current loan product reviews, see the solar loan and EMI guide. For the tax benefit angle, the solar and income tax guide covers Section 24(b) in detail.
Frequently asked questions
Which solar financing option is best in India in 2026?
For homeowners with existing property, a green home loan or home loan top-up is the best option. It offers the lowest interest rate at 8 to 10 percent per annum, qualifies for Section 24(b) tax deduction on interest up to Rs 2,00,000 per year, and can be prepaid using the PM Surya Ghar subsidy. Personal loans have no tax benefit and cost significantly more over the loan term.
Can I use the PM Surya Ghar subsidy to prepay my solar loan?
Yes. When the Rs 78,000 subsidy credits to your account, you can use it to prepay your solar loan. Confirm with your bank that no prepayment penalty applies. Most PM Surya Ghar-linked bank loans and green home loans have zero or minimal prepayment charges. Check your loan agreement before doing so.
Is a personal loan a bad idea for solar?
Not necessarily bad, but it is significantly more expensive than a secured loan. Interest rates of 10.5 to 15 percent with no tax benefit mean you pay substantially more over the loan term. If you do not own property or cannot access a home loan, a personal loan is better than delaying installation indefinitely, especially if bill savings offset most of the EMI.
What is the minimum income required for a solar loan?
Eligibility varies by bank. For green home loans, banks typically require a minimum monthly income of Rs 25,000 to Rs 35,000 for salaried individuals. For a personal loan, requirements are lower but rates are higher. NBFC solar financing products often have more flexible eligibility but verify the effective interest rate before accepting.
Can I take the subsidy first and then pay for installation?
No. The PM Surya Ghar subsidy is disbursed after installation and commissioning, not before. You must arrange the full installation cost independently first. The subsidy arrives 60 to 150 days after commissioning in most states. This is why most homeowners take a loan to bridge the gap and then prepay using the subsidy amount.
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