The dealer fee is the most expensive line item in your solar loan.

Six months ago a homeowner in Lakewood forwarded us a proposal quoting "0.99% APR for 25 years." The cash price of the same system, paid up front, was $6,800 lower.

The industry calls the gap a dealer fee: an upfront markup the lender pays the installer in exchange for a below-market rate. The installer rolls it into your loan principal, so it never appears as a line item — the solar industry's version of resort pricing, except the resort fee is a third of the bill.

A 25% fee turns $24,200 into $32,267.

Suppose you're quoted a $24,200 system, financed at 0.99% APR over 25 years. The lender knows that rate doesn't cover their cost of capital, so they charge the installer a fee — typically 22–28% of the financed amount — and the installer rolls that fee into your loan principal.

On a $24,200 system with a 25% dealer fee, the loan principal becomes $32,267. You'll make 300 monthly payments of about $122. Total paid: $36,500. Compare that to the cash price: $24,200, paid once — $12,300 less than the loan's total payments.

"Lenders structure the loan to feel cheap and audit expensive. That's a design choice."

We've reviewed 312 proposals where a dealer fee was disclosed in the fine print. The median fee was 24.7%. None of them showed the cash-price equivalent next to the financed price. That's a marketing convention, and no regulation forbids showing both prices.

How to spot it before you sign.

Three places to look. First, ask for the cash price in writing. If the installer says they "don't quote cash," the dealer fee is the reason. Second, request the loan agreement's truth-in-lending disclosure — the amount financed line will not match the system price. The difference is the fee. Third, run the numbers yourself: work out what all 300 payments are worth as one lump sum today — the present value. If that figure tops the cash price by more than ~5%, you're looking at a dealer fee.

What we report in an audit.

When we audit a financed proposal, we report two numbers: the cash-equivalent system cost and the effective APR — the interest rate you'd be paying if the loan had been written on the cash price instead of the marked-up one. On the Lakewood quote, the effective APR was 8.4% against the quoted 0.99%. That's the number the homeowner needed to compare against a HELOC, a personal loan, or paying cash.

The lender discloses the dealer fee somewhere in the loan paperwork, where only someone already hunting for it will find it. And almost no one benchmarks it against the cash alternative the homeowner could have negotiated.

The fix: ask for the cash price, run the present-value comparison, and reject any quote that won't show its work.