Rooftop Solar Loan vs Personal Loan: Which Should You Choose?

So, you’ve finally decided to go solar, the quotes are in, the rooftop is surveyed, the vendor is chosen, and you’ve even figured out how to apply for the PM Surya Ghar Muft Bijli Yojana solar subsidy scheme. Right then comes the question that stalls most homeowners in their tracks. How do you actually pay for the system?

If we take the example of a 3 kW rooftop solar system in a tier-1 city like Pune, it costs ~Rs. 2.15 lakh* without a subsidy. For this capacity, the PM Surya Ghar Muft Bijli Yojana subsidy you can claim is Rs. 78,000. Which means, you’ll still need ~Rs. 1.37 lakh* to have this system installed on your roof. This is exactly where two home solar financing options come in handy.

• A dedicated rooftop solar loan from a PSU bank or NBFCs.
• A personal loan for solar panels from any bank where you already have an account.

*Please note that these prices are subject to change: The above-mentioned cost of rooftop solar in Pune is indicative as of 31st May 2026 for the SolarSquare Blue 6ft variant. The final cost of installing a rooftop on-grid solar system for homes depends on your DISCOM charges, city, product variant opted for, panel type, inverter type, mounting structure height, type of after-sales service, savings guarantee, roof height, etc.

Getting a personal loan for solar panels might feel easier because you’ve probably taken one before. However, a dedicated rooftop home solar loan turns out to be significantly cheaper in the long run.

So, how do you choose the right one for yourself? That’s what we will help you figure out in this guide on rooftop solar loan vs personal loan, with proper side-by-side comparison, mistakes to avoid when taking a loan for solar rooftop for home, and a clear decision framework you can apply to your own situation.

What is a Rooftop Solar Loan?

A rooftop solar loan is a financing scheme specifically offered by banks and NBFCs to fund the purchase and installation of a residential solar PV system. It is treated as a separate loan category at most public sector undertakings (PSUs) in India.

The reason it exists as its own category is that it’s backed by the PM Surya Ghar Muft Bijli Yojana, a scheme launched by the Government of India in February 2024 with a budget of over Rs. 75,000 crore.

The scheme aims to reach 1 crore households by March 31st, 2027, and progress has been quite remarkable so far. As of December 2025, public sector banks had already sanctioned over 8.3 lakh loan applications worth Rs. 13,926 crore under this single scheme.

Rooftop home solar loans under the PM Surya Ghar scheme are split into two clean slabs:

• Slab 1: This is for loans up to Rs. 2 lakh
• Slab 2: This is for loans up to Rs. 6 lakh

The rates are concessional, the tenure stretches up to 10 years, and the entire loan is structured so that the EMI aligns with the electricity savings the system starts generating from month one.

Who Offers Rooftop Solar Loans in India?

Almost every major public sector bank in India today offers a dedicated rooftop solar loan aligned with the PM Surya Ghar framework.

Private banks like HDFC and ICICI haven’t launched a dedicated home solar loan category yet. So, they route solar financing through their personal loans or home improvement loans instead.

And then there’s a third category, NBFCs and installer-backed schemes, which make home solar loans accessible to people with lower credit scores and those who prefer speed over hassle.

Here’s a side-by-side comparison of the different rooftop solar loans for homes from top lenders in India.

Key Features of a Rooftop Solar Loan

What really sets a solar roof loan apart from personal and home improvement loans is that it’s structured around an asset that generates monthly cash flow. That single fact changes everything. Here are the features that matter most.

• Lower interest rates: Rooftop solar loan interest rates for PSU banks start at 5.75% per annum for loans up to Rs. 2 lakh, which is genuinely among the lowest lending rates available in India today. The rate is so low because the scheme is government-backed.
• Collateral-free up to Rs. 2 lakh: There’s no third-party guarantee needed, no asset pledge, and no security deposit asked for, because the solar system itself acts as the asset on paper. For loans above Rs. 2 lakh, some banks may require hypothecation of the solar equipment, but it still doesn’t affect your house or any other personal assets.
• Tenure up to 10 years: This is long enough to ensure that your EMI stays comfortably below your monthly electricity savings, which is what keeps the loan for solar rooftop for homes from PSUs self-paying from month one.
• Zero prepayment penalty: This is mandated by the scheme guidelines and matters a lot in practice. Your subsidy of up to Rs. 78,000 is deposited in your account within 30 days after system commissioning, and you’ll want to use that money to part-prepay the solar rooftop home loan without paying any penalty.
• Six-month moratorium offered by PSUs: Your EMI clock starts only six months after disbursement, giving the system time to be commissioned, the net meter or smart meter installed, and the subsidy credited before you pay a single rupee.
• Subsidy integration built into the workflow of the loan for solar rooftop for homes: The PM Surya Ghar Muft Bijli Yojana National portal and the Jan Samarth portal are linked to each other. So, your subsidy claim gets linked to your loan account by design without any extra paperwork.

What is a Personal Loan for Solar Panels?

A personal loan for solar panels is an unsecured retail loan that you can use to finance a rooftop installation, and that’s the most important thing to understand about it.

Since a personal loan is unsecured, the bank doesn’t care whether you spend the money on solar, a wedding, a car, or anything else. The personal loan is approved based on your income and credit profile. The money is disbursed to your account, and from there on, the end use is entirely up to you.

The reason this matters is that the absence of a specific use case is exactly what makes a personal loan different from a dedicated rooftop solar loan.

• A secured loan is asset-backed: The asset itself serves as security, significantly reducing the bank’s risk. Lower risk means a higher approval rate and a lower interest rate for you.
• An unsecured loan has nothing backing it: The bank takes on a much higher risk. As a result, the approval rate drops, the due diligence gets stricter, and the interest rate ends up higher. That’s the real reason why a personal loan is more expensive than a rooftop home solar loan.

Personal Loan Interest Rates in 2026

Here’s a snapshot of the personal loan interest rates in India in 2026:

Please note: The exact interest rate for a personal loan for solar panels depends heavily on your CIBIL score, monthly income, employer profile, and how long you’ve been a customer with that bank.

Key Features of a Personal Loan for Solar Panels

Personal loans look attractive on paper because of their speed and no-questions-asked flexibility. However, the trade-offs become clear once you actually understand all the key features, listed below.

• Unsecured with no collateral required: You don’t need to pledge any asset, hand over property documents, or arrange for a guarantor. The bank offers a personal loan for installing solar panels based solely on your income and credit profile.
• Flexible end use with no proof-of-spend required: If it’s approved, you won’t be asked for invoices, vendor quotations, or installation receipts. Once the money is in your account, the bank doesn’t track where it goes.
• Tenure is 1 to 3 years: A short tenure pushes the EMI above your monthly electricity savings, which defeats the entire point of going solar.
• Prepayment penalty after the lock-in period: Most personal loans charge a penalty if you close the loan sooner or try to make a partial prepayment.
• Heavy dependence on customer profile: The interest rate, loan amount, and even whether you get approved depend on your CIBIL score, salary, employer category, and banking history. This makes it incredibly difficult for first-time borrowers to secure a personal loan for solar panels, as they lack a strong credit history.
• Your existing relationship with the bank matters a lot: The best pre-approved offers and the lowest rates go to customers who already have a savings account or fixed deposits with the same bank.

Rooftop Solar Loan vs Personal Loan at a Glance

The best way to choose between a rooftop solar loan and a personal loan for solar panels is to compare them side-by-side across multiple factors. That’s why we’ve created this table for you. Have a look.

Solar Loan vs Personal Loan, Which is Better for You?

If we’re being honest about it, a rooftop solar loan beats a personal loan on pretty much every objective parameter that matters when you’re financing solar.

The rate is lower, the tenure is longer, there’s no prepayment penalty, and you even get a six-month moratorium before EMIs begin for solar roof loans from PSUs.

That said, a personal loan does still win in a few specific situations. Let’s look at all the sides clearly.

When is a Rooftop Solar Loan through PSUs the Right Choice?

A rooftop solar loan is the obvious right choice when your situation matches most of the conditions below.

• You own the property with clear roof rights and a valid electricity connection in your own name.
• You can wait 10 to 15 days for loan approval, and don’t have an urgent installation deadline pushing you to act fast.
• Your CIBIL score is 680 or above, which is the threshold to qualify for the concessional PSU rate without complications.
• You want the lowest possible borrowing cost, and you’re willing to navigate the Jan Samarth and PM Surya Ghar portal workflow to get there.
• You qualify for the PM Surya Ghar subsidy and want it to flow through the integrated loan-and-subsidy mechanism without doing the paperwork yourself.
• You have an existing savings account with one of the participating PSU banks, such as SBI, PNB, Canara, BoB, BoI, or Union Bank.

When is a Rooftop Solar Loan through NBFCs the Right Choice?

A rooftop solar loan through an NBFC is the smarter pick when speed, convenience, and zero upfront investment matter more to you than chasing the lowest interest rate.

• You want the entire loan process to be fully digital: No branch visits, no physical KYC, and no in-person site inspections by a bank representative.
• You need loan approval within 24 hours: This could be because you want to lock in current solar panel prices, grab a festive offer, or simply not wait two weeks for a PSU bank to approve the loan.
• You’re a first-time borrower with a thinner credit history: You’d benefit from a lender that’s more accommodating on profile evaluation than a PSU bank.
• You’d like the option to finance 100% of the system cost: NBFCs don’t cap the loan amount to Rs. 6 lakh. They can finance the entire rooftop solar system for you.
• You don’t have an existing savings account with a PSU bank and don’t want to open one: NBFCs don’t require a prior banking relationship to lend you money to install a rooftop solar loan.

When is a Personal Loan for Solar Panels Actually Better?

A personal loan for solar panels makes genuine sense in a much smaller set of scenarios, but in those specific situations, the disadvantages of a higher rate and shorter tenure are outweighed by other practical priorities.

• You don’t own the property and can’t arrange an NOC from the owner: PSU solar loans require property ownership documents, and a personal loan is the only practical workaround in this situation.
• You’re bundling solar with other home improvements: You need money for tasks like painting, kitchen renovation, or AC installation, beyond just solar installation. A single personal loan covers all of it without requiring proof of where the loan amount is being used.

The Verdict — A Decision Framework

Here’s a quick decision table that maps the most common borrower situations to the best financing option for each.

How to Apply for a Rooftop Solar Loan in India?

While the exact process can vary slightly based on the bank you choose, here’s how you can apply for a rooftop solar loan in India under the PM Surya Ghar Muft Bijlu Yojana scheme:

• Pick your installer first: Start by choosing an experienced vendor, ideally one that offers a generation guarantee with a money-back promise and an after-sales maintenance plan.
• Register on the Jan Samarth Portal: Your rooftop solar loan journey starts online here. Register on the portal, and submit your initial loan request along with the vendor quotation and basic details.
• Visit the branch for KYC: Once your application is approved, you’ll need to visit your bank branch in person to complete the KYC verification and submit the physical documents for cross-checking.
• Allow the site inspection: A bank representative will visit the rooftop in person to confirm feasibility before the loan gets formally sanctioned.
• Receive a staged disbursement: A portion of the loan for solar rooftop for homes is disbursed directly to the vendor before installation begins, and the rest is released once your system is fully installed and commissioned by the DISCOM.

If you’re going the NBFC route through a scheme like SolarSquare’s zero-investment scheme, the process is dramatically simpler. The application is fully digital, approval usually comes through within 24 hours, and there’s no branch visit, site inspection, or down payment required at any stage.

Common Mistakes to Avoid When Choosing a Loan Option for Solar Installation

Even after you’ve picked the right loan type, there are a few common slip-ups that can negatively affect the savings you were expecting from your rooftop solar system. Here’s what to watch out for.

• Picking a shorter tenure, thinking you’ll save on interest: A 3-year tenure on a Rs. 1.5 lakh loan generates an EMI that’s higher than your monthly electricity savings, which defeats the entire point of going solar through financing in the first place. A longer tenure keeps the loan self-paying from month one, and you can always prepay later using the subsidy when it arrives.
• Not negotiating with your existing bank: Home loan customers at SBI, PNB, BoB, and Union Bank often qualify for solar loans at the same interest rate as their existing home loan. Existing personal banking customers also receive pre-approved offers at rates lower than the publicly listed rate. Always ask before you sign anything.
• Not confirming vendor empanelment before signing the quotation: A vendor who isn’t on your DISCOM’s MNRE-empanelled list simply cannot receive disbursement from a PSU solar loan, no matter how good the quotation looks. Always confirm their empanelment status before paying any advance or signing the quote.
• Skipping the moratorium math: The six-month moratorium on PSU solar loans isn’t there to slow you down. It’s a cash-flow protection that gives your subsidy time to land before your EMI begins.

Conclusion

A PSU rooftop solar loan starting at 5.75% per annum is currently the cheapest way to finance solar in India in 2026. It comes with a 10-year term, a zero-prepayment penalty, and a built-in subsidy mechanism that handles most of the paperwork for you. For homeowners with a CIBIL score above 680 and no urgent timeline, this route is unbeatable.

NBFC-backed solar loans at 12-13% per annum offer higher interest rates for 24-hour approval, higher loan amounts to finance the entire system cost, and zero down payment. For first-time borrowers, those with thinner credit histories, or anyone who genuinely values speed and digital convenience, this is the better fit overall.

A personal loan for solar panels at 12% to 16% per annum is rarely the most efficient way to finance solar. However, it still has its place in specific situations, such as bundled home improvement projects where a solar loan doesn’t apply.

To find the financing option tailored to your home and credit profile, you can also book a free solar consultation call with SolarSquare.

FAQs

How much CIBIL is required for a solar loan?

This depends on the lender:

• For the PSU rooftop solar loan, you need a CIBIL score of 680+.
• For a personal loan for solar panels, the minimum CIBIL requirement is 680.
• For an NBFC solar roof loan, you need a CIBIL score of 650+.

Are there tax benefits on rooftop solar loans in India?

For homeowners, there’s currently no specific income tax deduction available on the interest paid on a rooftop solar loan. Businesses that install solar, on the other hand, can claim accelerated depreciation of 40% in the first year on solar assets, which lowers their taxable income significantly.

Can I get a rooftop solar loan without owning the property?

This is possible, but only under a strict condition. You’ll need to be a co-applicant with the property owner, and only blood relatives qualify as co-applicants on a PSU solar loan. Tenants, friends, or unrelated co-residents won’t be allowed to apply jointly.

What is the maximum loan I can get for rooftop solar?

The PM Surya Ghar loan through major PSU banks is capped at Rs. 6 lakh. However, a solar roof loan through NBFCs doesn’t really have a cap. With a good credit score, NBFCs can finance the entire cost of rooftop solar.

Can I use a home improvement loan for solar panels?

Yes, you can. Several banks classify rooftop solar under home improvement loans, especially for existing home loan customers. The rates are aligned with home loan ROI or sit slightly above it, which makes them competitive with personal loans but still more expensive than a dedicated PSU solar loan.

What is the interest rate difference between a solar loan and a personal loan?

The gap is quite significant in practice. The PM Surya Ghar rooftop solar loans offered by PSUs start at 5.75% per annum, while personal loans usually range from 12% to 16%.

What documents are needed for a solar loan compared to a personal loan?

A PSU rooftop solar loan needs KYC documents like Aadhaar and PAN, your latest electricity bill, property documents in the applicant’s name, income proof (salary slips or ITR), and the vendor’s system quotation. A personal loan, in comparison, only needs KYC, address proof, and income proof.

Does taking a personal loan for solar affect the PM Surya Ghar subsidy eligibility?

No, it doesn’t. The PM Surya Ghar Muft Bijli Yojana subsidy is tied to the installation itself, and not to how you’ve chosen to finance it. As long as your system is installed by an MNRE-empanelled vendor and commissioned with a net meter by your DISCOM, the subsidy of up to Rs. 78,000 will be credited to your bank account regardless of whether you used a personal loan, a solar loan, or your own cash to pay for it.

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