Hidden dealer fees inflate solar loan costs by 20-40% above cash price, and lenders don't disclose them in APR

When a homeowner finances a solar installation through the installer's recommended lender, the lender pays the installer a referral kickback called a 'dealer fee' that ranges from 20% to 40% of the system's cash price -- sometimes exceeding 50%. This fee is rolled directly into the homeowner's loan principal, but it is not disclosed as part of the APR calculated under the federal Truth in Lending Act. A $25,000 system purchased with cash becomes a $32,500-$35,000 loan, and the homeowner often has no idea the markup exists because the installer never quotes a separate cash price. This matters because homeowners end up underwater on their solar investment from day one. They owe $35,000 on a system worth $25,000, which becomes a serious problem if they need to sell their home, refinance, or if the system underperforms the savings projections the salesperson promised. The inflated loan balance means the system may never reach positive ROI within the loan term, especially in states where net metering has been cut. Homeowners who thought they were making a financially sound infrastructure investment discover they overpaid by thousands of dollars for an opaque financing fee that primarily enriched the installer and lender. This problem persists because the solar financing industry operates in a regulatory gray zone. The CFPB issued an issue spotlight in August 2024 documenting these practices, finding that lenders frequently 'bake' dealer fees into loan principal without indicating they represent a markup from cash price. But enforcement action has been limited. Dealer fees are technically legal because they're structured as a cost-of-goods markup rather than a finance charge, which allows lenders to exclude them from APR disclosures under TILA. The solar installer has no incentive to disclose the cash price because the dealer fee is their primary profit mechanism on financed deals. And homeowners lack the financial literacy to ask 'what would this cost if I paid cash?' because no one in the sales process prompts that comparison.