A dealer fee is a markup solar lenders pay to installers, recovered by charging you a higher loan principal. On a $28,000 system, a 25% dealer fee adds $7,000 invisibly. The CFPB documented this in 2025. Here is how it works.
By Solar Installers Near Me Research Team • Published
Direct answer
A solar dealer fee is a payment a solar lender makes to an installer as a sales incentive for bringing the lender a financed customer. The lender recovers that fee by lending you more than the system costs. Dealer fees run 19 to 35 percent of system cost and are not disclosed as a line item in your contract. On a $28,000 system with a 25% dealer fee, your loan principal is $35,000 for a system worth $28,000. Source: CFPB Issue Spotlight on Solar Financing, 2025.
Key facts
Dealer fees are NOT illegal. The legal issue is non-disclosure. The CFPB and Minnesota AG are pursuing disclosure violations, not the fees themselves.
On a $28,000 system with a 25% dealer fee: loan principal is $35,000. You finance $7,000 in lender profit with interest.
You can pay both a broker markup (system price inflation) and a dealer fee (loan principal inflation) on the same transaction.
Leases and PPAs have no dealer fee. The financing cost is embedded in the monthly rate instead.
The simplest detection method: ask for the cash price and compare it to the financed total. The difference includes the dealer fee.
The hidden arithmetic
A solar system has an actual installed cost. The installer has a relationship with a lender that pays a sales incentive for bringing financed customers. The lender pays that incentive to the installer on top of the system cost, then loans the customer the combined amount.
Here is what that looks like with a specific example: a system costs $28,000 to install. The lender pays a 25 percent dealer fee. The lender pays the installer $28,000 (system) plus $7,000 (fee) for a total of $35,000 paid out. The lender then loans you $35,000. Your monthly payment is based on $35,000 in principal. Over a 20-year loan at a market rate, you pay substantially more than the system's actual cost.
This fee does not appear on your contract as a line item. You see a total financed amount. You do not see how much reflects equipment and installation versus the lender's sales incentive to the installer. The CFPB documented this in the 2025 Issue Spotlight on Solar Financing and identified it as a consumer protection priority.
Dealer fee risk by structure
| Category | Financing Structure | Dealer Fee Risk (dollar amount disclosed) | How to Detect or Avoid |
|---|---|---|---|
| Cash purchase | Cash purchase | None. No lender, no dealer fee mechanism. | Ask for a separate cash price quote from each installer to use as a baseline comparison. |
| Solar loan | Solar loan | High risk. Fees run 19 to 35% of system cost. Not disclosed as a line item. | Ask: "What dealer fee does your lender pay you, in dollars?" Compare cash price to financed total. The gap includes the dealer fee. |
| Solar lease | Solar lease | None in the traditional sense. The financing cost is embedded in the monthly rate. | Compare the monthly lease rate to your current utility rate. Model the full 25-year payment stream. Watch the annual escalator clause. |
| Power Purchase Agreement (PPA) | PPA | None in the traditional sense. Cost embedded in per-kWh rate. | Compare the PPA rate to your utility rate at signing. Model the 25-year total with the annual escalator applied. Verify PPA is legal in your state. |
Our proposals show the dealer fee as a line item in dollars. Every time.
An independent assessment covers your payback model, your state incentives, and a side-by-side financing comparison that includes dealer fee disclosure as a standard item -- not something you have to ask for. No commission on any option.
Q and A
An independent assessment includes a full financing comparison with dealer fee disclosure as a line item -- not hidden in the principal. No commission. No shared lead. No door-knockers.
