Does anyone finance their panels?

[BrettS]

Has anyone spoke to Mosaic about down payments yet? Spotted this in my contract, which makes me wonder about the ability to make principal-only prepayments:

"To the extent permitted by applicable law, all payments or prepayments will be applied first to our fees, then to costs and expenses payable to us under this Agreement, including any costs or expenses that we incur related to enforcement of this Agreement as further described in Section 10 (“Remedies”) below, then to accrued interest and then to unpaid principal in the inverse order of maturity (last to first)."

I sent them a quick email asking about down payments or principal-only prepayments, and I'll update the thread when they get back to me, but curious if anyone knows right now.

I mean reading that it doesn’t really seem like a problem. As long as you are paying on time then there won’t be any fees or costs or expenses related to enforcement of the agreement. Accrued interest will be paid off each month when you make your normal monthly payment, so anything paid in addition to the normal monthly payment will go to principal.

I think all that is saying is that if you have any outstanding fees or anything on the account then your payments will be applied to those first, but like I said, as long as you’ve been paying on time then there won’t be any fees to apply the payments to.

 

[holeydonut]

Has anyone spoke to Mosaic about down payments yet? Spotted this in my contract, which makes me wonder about the ability to make principal-only prepayments:

"To the extent permitted by applicable law, all payments or prepayments will be applied first to our fees, then to costs and expenses payable to us under this Agreement, including any costs or expenses that we incur related to enforcement of this Agreement as further described in Section 10 (“Remedies”) below, then to accrued interest and then to unpaid principal in the inverse order of maturity (last to first)."

I sent them a quick email asking about down payments or principal-only prepayments, and I'll update the thread when they get back to me, but curious if anyone knows right now.

It seems you're highly confident in your ability to get the tax credit and pay this down quickly. I am familiar with Mosaic (they're a struggling startup out of Oakland, CA). You can always gauge the health of a Bay Area startup using their careers page. If they're out of stealth mode but not hiring product/engineering roles; then they're in trouble or about to get acquired. Knowing their poor reputation in the finance world, they're probably not about to get acquired.

Work With Us | Join Mosaic

Anyway, Mosaic has had to constantly tweak their lending contracts to be much more punitive against people like you. You're basically using them as short term bridge financing, but they can't operate a business if borrowers do what you're doing. Mosaic needs to be able to push their loans in the capital markets, but the only way to do that is if the loans return good yield over time. Loans like yours would prepay too quickly and blow up the residual on the deal.

I feel like for what you're trying to do you might as well just put your financed solar cost on one of those 0% interest for 12 months introductory/balance-transfer offers through a reputable credit company. Or a low-rate introductory HELOC through a solid lender. In both of these cases the lenders are simply willing to take the risk that you fail to come up with the cash fast enough. But they won't be as willing to hide weird fees or prepayment schedules on you since they'd be real companies and not a Bay Area startup.

Hell, with your confidence on repayment... your employer may even do a short term employee-loan (if your performance is stellar against likely bonus/sales targets). These employee loans happen more often than people realize; to the extent the IRS has formal guidance on it.

 

[willow_hiller]

Mosaic needs to be able to push their loans in the capital markets, but the only way to do that is if the loans return good yield over time. Loans like yours would prepay too quickly and blow up the residual on the deal.

All things being equal, I think Mosaic should be relatively indifferent between a fast repayment and a scheduled repayment. A fast repayment just means they get their capital back faster to make more loans. And they finance the Tesla Small system for $8,200 as well, so it's not like loans under a certain amount of principal aren't worthwhile to them. But I figure if I can put 60% down prior to the loan start date, I should be able to minimize the total amount of interest paid until I can get my tax credit.

And to be honest, I went with Mosaic for the convenience. It was one additional click on the Tesla application and is fully integrated into their system as far as the disbursement of funds. If I had gone with external financing, it would have been more difficult to apply for, and more difficult to arrange timely disbursement to Tesla when the actual install date is uncertain.

 

[holeydonut]

All things being equal, I think Mosaic should be relatively indifferent between a fast repayment and a scheduled repayment. A fast repayment just means they get their capital back faster to make more loans. And they finance the Tesla Small system for $8,200 as well, so it's not like loans under a certain amount of principal aren't worthwhile to them. But I figure if I can put 60% down prior to the loan start date, I should be able to minimize the total amount of interest paid until I can get my tax credit.

And to be honest, I went with Mosaic for the convenience. It was one additional click on the Tesla application and is fully integrated into their system as far as the disbursement of funds. If I had gone with external financing, it would have been more difficult to apply for, and more difficult to arrange timely disbursement to Tesla when the actual install date is uncertain.

I agree the credit rating for the note holders is mostly indifferent to the timing of principal repayment, but Mosaic needs to hold 5% risk across the financing structure due to regulatory requirements. And since this is an "esoteric" structure (their term not mine) Mosaic probably held 5% of the residual. I guess if someone wants to dig into their 2020 June deal we can learn about how these home improvement loans make money so they can stay in business.

Anyway, this residual value needs the cash flow of borrowers paying over time; prepayments definitely harm the residual yield. So Mosaic needs to protect itself on the other side by recouping something when people prepay well ahead of schedule.

I'm glad you're doing your diligence on this; hopefully you'll have positive news to report when this loan is dusted in 2021.

 

[Willy3]

Has anyone spoke to Mosaic about down payments yet? Spotted this in my contract, which makes me wonder about the ability to make principal-only prepayments:

"To the extent permitted by applicable law, all payments or prepayments will be applied first to our fees, then to costs and expenses payable to us under this Agreement, including any costs or expenses that we incur related to enforcement of this Agreement as further described in Section 10 (“Remedies”) below, then to accrued interest and then to unpaid principal in the inverse order of maturity (last to first)."

I sent them a quick email asking about down payments or principal-only prepayments, and I'll update the thread when they get back to me, but curious if anyone knows right now.

that does not sound reassuring. Please do post how they respond

 

[All In]

After saying this, I realize you said you're a Tesla owner yourself. You can of course refer yourself, but we don't 100% know the outcome yet: Use my own referral code?

I ended up pulling the trigger the other day and did in fact try to refer my self (because I was logged in). We'll see how it turns out...

 

[willow_hiller]

that does not sound reassuring. Please do post how they respond

Interesting response from Mosaic:

"
Thank you for reaching out to Mosaic.

If you are wishing to make a down payment, you will need to contact your installer, Tesla. You will need to pay them directly and apply a down payment towards your loan and then they will adjust the loan amount to just what is needed for financing.
"

 

[solarAddict]

I went with local installer for solar and PW. I've financed both with two different loans thought the same credit union (suggested by installer). While solar loan is nothing to brag about, here is some somewhat useful info for MA (or perhaps some other states?) residents who considering PW install:

If you subscribe to National Grid response program your PW installation is qualify for 7 years 0% APR loan under HEAT program.

 

[Zer0t]

I went with local installer for solar and PW. I've financed both with two different loans thought the same credit union (suggested by installer). While solar loan is nothing to brag about, here is some somewhat useful info for MA (or perhaps some other states?) residents who considering PW install:

If you subscribe to National Grid response program your PW installation is qualify for 7 years 0% APR loan under HEAT program.

Is this a national program or by state? I couldn't find anything related to financing. Sorry my Google fu isn't awesome.

 

[niveknow]

May be referring to this. The National words a bit misleading as it seems to be narrowed down to 3 states:

Our Company | National Grid

 

[willow_hiller]

Fairly easy to give Tesla a call and place a large down payment. There is an important piece of information the customer service agent gave me, however. The minimum financing amount for a loan through their partners is $10,000. So people placing Small orders of $8,200 would need third party financing, or if you ordered a Medium system you would only be able to place a $6,400 down payment out of the total $16,400.

 

[Zer0t]

May be referring to this. The National words a bit misleading as it seems to be narrowed down to 3 states:

Our Company | National Grid

Yeah that's what I saw and thought perhaps I had missed something.

 

[solarAddict]

Is this a national program or by state? I couldn't find anything related to financing. Sorry my Google fu isn't awesome.

Looks like it's local.

Mass Save® HEAT Loan


"No-interest loans are available for the following qualifying home energy efficiency improvements through the Mass Save HEAT Loan Program and Approved Lenders:" ->
- Battery Storage Participating in ConnectSolutions
If you own a battery storage system, Connected Solutions lets you earn incentives for allowing your Sponsor to draw energy from it during times a peak demand.

 

[Zer0t]

Sorry I know I list my location UWS NYC but this is for my house in NJ.

 

[niveknow]

Going back to the discussion on the loan mechanics, I see that we can pay a large down payment going through tesla and not the lender. What about 'principal payments' along the way? Is that allowed?

 

[willow_hiller]

Going back to the discussion on the loan mechanics, I see that we can pay a large down payment going through tesla and not the lender. What about 'principal payments' along the way? Is that allowed?

I don't believe so, no. The contract from Mosaic is pretty clear that interest is paid first before principal in all circumstances. You do get the benefit of the re-amortization at 18 months, which will lead to a lower monthly payment if you make more prepayments, but as far as I can tell your only way to guarantee principal-only payments is with your down payment.

 

[niveknow]

Sorry for multiple questions. you seem to have done more analysis on this than anyone else. Thank you!

1) re: that 18 month re-amort mark. Can you also make a large sump there or again all part of the initial down payment?
2) What about full remaining balance loan payoff say in month 19th.

 

[BrettS]

I don't believe so, no. The contract from Mosaic is pretty clear that interest is paid first before principal in all circumstances. You do get the benefit of the re-amortization at 18 months, which will lead to a lower monthly payment if you make more prepayments, but as far as I can tell your only way to guarantee principal-only payments is with your down payment.

The snippet of the contract you posted above says that “accrued interest” is paid first. That just means interest that has been generated up to the date of the payment. Part of your regular monthly payments will go toward accrued interest, so as long as you are making regular payments on the account there will never be a significant amount of accrued interest build up. Worst case, if you pay a big lump sum the day before your regular monthly payment you will just have 29 days of accrued interest to pay off, which will be pretty insignificant compared to making a large payment to pay down the principal.

 

[willow_hiller]

Sorry for multiple questions. you seem to have done more analysis on this than anyone else. Thank you!

1) re: that 18 month re-amort mark. Can you also make a large sump there or again all part of the initial down payment?
2) What about full remaining balance loan payoff say in month 19th.

One 1, they are expecting you to deposit your Federal Tax Credit (26%) before the 18 month mark in order to keep the lower monthly payment. But if there is any accrued interest in your account prior to that deposit, a portion of it will go to interest instead of all principal.

On 2, there's no early payoff penalty, and it says that any additional payments made after month 18 will shorten the payoff period. So there's no reason why you couldn't pay it off early.

Thanks for the clarification @BrettS , this is only my second large loan after my mortgage, so it's a bit difficult getting to grips with all of the terms. They do seem to be a little sneaky by starting the loan on the installation date, and then not requiring your first payment until 3 months after that date. So they do want the loan to accrue a little bit of interest before you can pay down any of the principal.

 

[BrettS]

Thanks for the clarification @BrettSThey do seem to be a little sneaky by starting the loan on the installation date, and then not requiring your first payment until 3 months after that date. So they do want the loan to accrue a little bit of interest before you can pay down any of the principal.

I’m not sure if it’s really them being sneaky or just trying to get Tesla paid and not forcing you to make payments until after you have PTO and can operate your system.

I think I’m a little farther along in the process than you... my install was at the end of June and I still don’t have my PTO yet. A few days after the install I got an email from Mosaic letting me know that they made the first payment to Tesla for the install. It wasn’t the full amount, but it was about 80 or 85%, if I remember right. So certainly from Mosiac’s point of view, they have paid out that money and it makes sense for them to start charging interest on it. And from Tesla’s point of view, they have done the install and the materials are now in my possession and installed on my roof, so it makes sense to pay Tesla a significant amount of the balance after the install.

But from the consumer’s point of view, people wouldn’t really want to be paying on a loan until after they get PTO and can operate their new system. Not only because you don’t want to be paying for something that you can’t use, but also because if you’re using the solar system to offset your power bill then you would still be paying the power bill and also paying the solar loan. So I can understand why they don’t start the payments for a few months, so you can get your PTO and start operating your system before you have to start making payments.