In a recent story on Business Insider, it was noted that a couple took out a personal loan for $15,000 and are now saving $500 monthly on their electricity bill because they invested in solar panels.

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While the concept of borrowing money upfront to save in the long run makes sense, the reality is that Americans are drowning in debt. According to data from the Federal Reserve Bank of New York, household debt for Americans reached an all-time high of $18.2 trillion in the first quarter of 2025

We will explore how a couple saved $6,000 a year by borrowing $15,000 and then try to determine if this is a wise financial move.

Due to the unique weather conditions where they live, which can include hurricane season, an ice storm or sweltering heat, the couple knew they had to stay prepared. When they experienced an air conditioning issue in the summer of 2024, they decided it was time to switch to solar.

They took out a personal loan of $15,000, and the husband decided to complete the entire installation himself to save $15,000 in labor costs. For a 3,000-square-foot home, they needed 30 panels rated for 450 watts each. They determined that the materials and tools would cost between $12,000 and $15,000.

The project took a few weeks to complete, and within the first month, they were able to cut their monthly electricity bill in half, saving approximately $500 per month.

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They were approved for a $16,000 loan over 48 months, and the funds were deposited into their account the same day. The loan has no penalties for early payoff, and they plan to use the savings to pay off the solar investment. The $500 saved monthly on the electrical bill is being put towards paying down the loan, but the payment amount was never specified.

Does it make sense to borrow money through a personal loan up front for long-term savings? Keep reading for a financial expert’s take on the situation.

“If taking out a loan can save you money, you can call it a net win,” said Melanie Musson, a finance expert with InsuranceProviders.com. “If taking out a loan will help you break even, it’s not worth the financial burden of taking out a loan.”

It’s essential to note that the financial terms of the personal loan may determine whether it’s worthwhile or not.

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The article mentioned that the couple obtained the loan from OneMain Financial, but did not specify the terms. However, in a review on the publication of the lender, it’s noted that the origination fee on loans can be high and that the interest rates can range from 18% to 35.99%. This means that the $15,000 could end up costing much more than expected.

For example, if you plug the numbers into a calculator, a personal loan of $15,000 for 48 months with an interest rate of $18% will cost you $6,150 in interest payments, which means that the original amount of $15,000 will end up being $21,150. This doesn’t even include the origination fee and any other possible costs.

You’ll want to plug the numbers into a calculator to determine how much the personal loan is costing you in interest. You may think that you’re only borrowing $15,000, but you could end up spending double this amount, offsetting any possible savings.

It’s worth noting that the husband is an engineer and a hobbyist craftsman, so he was able to complete the renovations on his own. Although it took longer to get everything up and running, they were able to save money.

However, this may not always be the case, and investing $15,000 in solar panels on your own could come with additional headaches and expenses if something goes wrong during the process. If you’re not entirely confident in your abilities to renovate, you may want to think twice about borrowing money to upgrade your home.

Musson emphasized that consumers should exhaust other alternatives before taking out a personal loan.

While a personal loan may be the only option in some cases, there are banks and credit unions that offer solar panel loans where you can get a better interest rate than you would with a personal loan. You can also consider a home equity loan or a home equity line of credit if you want to make investments in your property.

“If you can’t secure funding with better terms and interest rates, then a personal loan can be a good option if it allows you to save money,” Musson concluded.

As always, it’s advised you obtain professional financial advice before making a significant financial investment, as you don’t want to jeopardize your future finances.

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This article originally appeared on GOBankingRates.com: I’m a Financial Expert: A $15K Personal Loan Can Save You $6K a Year — Here’s How