Solar Lending Enforcement: A Warning for Auto Lenders

At this year’s Powersports Finance Summit, I attended a panel discussion on state and federal compliance. One of the key takeaways was clear: trends in state enforcement in solar lending may increasingly impact powersports and auto lenders. The parallels in regulatory focus are becoming harder to ignore. 

As state regulators turn a more critical eye toward solar lending, what begins on rooftops may soon cast a long shadow over vehicle finance. The enforcement trends taking shape in the solar sector provide a real-time warning signal for any lender whose borrower communications aren’t airtight. 

And while federal enforcement may be slowing down, compliance obligations aren’t. It is important to stay aligned with compliance rules and regulations across the account life cycle - state and federal inquiries can “look back” at your compliance efforts when determining enforcement action. That means you could face liability for five or more years of infractions if enforcement priorities shift.   

What is happening in solar lending enforcement? 

Across the country, regulators are raising concerns about how solar loans are sold, structured, and disclosed. Key findings from the Consumer Financial Protection Bureau (CFPB) and others include: 

• Hidden dealer fees and inflated loan principals, with some loans including markups of 10–30% above the system cost. 

• Confusing tax credit representations, where consumers are shown reduced system costs based on federal incentives they may not actually qualify for. 

• Complex repayment structures that require large payments within a short time frame, often tied to receiving a tax credit. 

• Sales practices that include pressure tactics, misleading claims, or lack of transparency at the point of sale. 

The CFPB’s 2024 report on solar lending emphasized that consumers often “are not provided with clear and accurate information about the terms of the loan or the obligations that follow.” This focus on transparency, disclosure, and borrower understanding is setting the tone for regulatory expectations across consumer finance sectors. 

Why auto and powersports lenders should care 

While solar financing and vehicle lending may seem unrelated, they share several structural features: 

• Indirect lending models reliant on third-party dealers 

• Add-on products bundled into financing 

• Disclosures and notices governed by both federal and state laws 

• High expectations for borrower communications during the loan lifecycle 

• Auto and powersports lenders are already seeing heightened scrutiny. The CFPB’s 2024 Supervisory Highlights: Auto Finance Edition cited: Misleading APR advertising (“as low as” rates that very few borrowers qualified for) 

• Prepayment disclosures that failed to reflect actual loan terms 

• Improper bundling and cancellation barriers for add-on products 

• Repossessions carried out despite valid borrower modifications or disputes 

These examples mirror the issues emerging in solar lending and reinforce the message that regulators are looking closely at how terms are communicated and enforced. 

The communication fault line 

Much of the regulatory risk in both solar and vehicle lending stems from one common area: borrower communication. Whether it's a marketing email, dealer communications during the sale, a loan origination package, or a default notice, inconsistencies in tone, timing, or terminology can create serious exposure. 

Common breakdowns include: 

• APR figures that differ across documents 

• Letters that use unclear or contradictory language 

• Late or incomplete notices, especially around delinquency or repossession 

• Cancellation processes that are opaque or not well documented 

These aren’t just operational missteps. In the eyes of regulators, they can constitute unfair or deceptive practices. 

What lenders can do to mitigate risk: 

Proactive lenders should view the current solar lending scrutiny as a signal to review and reinforce their borrower communication strategies. Recommended steps include: 

• Centralize template management – Avoid relying on branch- or dealer-specific versions of borrower letters and disclosures. 

• Enable dynamic logic – Build templates that adjust language and requirements based on jurisdiction, loan type, and status. 

• Create audit trails – Ensure every template and letter version includes version history, approval workflows, and metadata. 

• Ensure consistency across channels – Disclosures, emails, letters, and servicing calls should align in tone and legal content. 

• Establish compliance checkpoints – Route high-risk communications (e.g., add-on product offers, default notices) through legal review. 

• Stay current on state requirements – Monitor ongoing regulatory changes and update templates in real time. (DataOceans offers a solution tailored to auto lenders with this capability built in - learn more about Compliance Hub+.)

Don’t let the sun go down on your communication compliance program 

Regulatory scrutiny rarely stays confined to one sector. What we’re seeing in solar lending - confusing disclosures, pressure-driven sales, mismatched loan documentation - is already making its way into other areas of consumer finance. 

Now is the time for lenders in auto, powersports, and related industries to assess how they manage borrower communications. Treat your letters, notices, and disclosures as strategic compliance assets, not just operational outputs. 

If the heat is rising, don’t wait to get burned. 
 
Are your borrower communications ready for regulator scrutiny? 
Let’s talk about how to strengthen your templates, disclosures, and delivery workflows - before enforcement trends catch up with your business. 

References & Further Reading 

CFPB Issue Spotlight on Solar Financing (August 2024): https://files.consumerfinance.gov/f/documents/cfpb_solar-financing-issue-spotlight_2024-08.pdf 

CFPB Consumer Advisory on Solar Loans: https://www.consumerfinance.gov/about-us/newsroom/consumer-advisory-steer-clear-of-costly-and-complex-loans-for-solar-energy-installation 

CFPB Supervisory Highlights: Auto Finance Special Edition (Fall 2024): https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights-special-ed-auto-finance_2024-10.pdf