Financing Disclosures Contractors Should Know Before Offering a Program
The CFPB has found that some home-improvement lenders bury markup fees that add 10 to 30 percent to the cash price, without clearly disclosing the markup (CFPB, Issue Spotlight: Solar Financing, August 2024). Most contractors sign up for a financing partner's program without ever reading the disclosure form itself. Then a customer complaint or a regulator inquiry lands on their reputation, even though the lender is the one legally on the hook for the disclosure.
This guide explains, in plain English, what Truth in Lending (Regulation Z) requires a lender to disclose, what the CFPB has specifically flagged in solar and home-improvement financing, where contractor liability actually starts and stops, and a practical checklist for vetting a financing partner's disclosures before you offer the program to customers. This is general information, not legal advice; consult qualified counsel for state-specific or program-specific questions.
> Key Takeaways
> - The Truth in Lending Act (Regulation Z) requires lenders to disclose the finance charge, APR, amount financed, and total of payments in writing (CFPB, 12 CFR Part 1026).
> - In 2024, the CFPB found some home-improvement lenders bury markup fees of 10 to 30 percent of the cash price, and in 2023, loans funded 58% of at-home residential solar purchases (CFPB, Issue Spotlight: Solar Financing, 2024).
> - The lender, not the contractor, is generally the "creditor" responsible for TILA disclosures, though sales claims that contradict the paperwork still create reputational risk.
> - This is general information, not legal advice. Consult qualified counsel for program-specific compliance questions.
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What is a financing disclosure, and why does it exist?
A financing disclosure is the written statement a lender must give a borrower before or at the time credit is extended, showing the finance charge, APR, amount financed, and total of payments, required under the Truth in Lending Act and its implementing Regulation Z (CFPB, 12 CFR Part 1026). It exists to standardize how the cost of credit gets presented, so a customer can compare one offer against another using the same numbers.
TILA dates back to 1968, and its purpose has not changed since: protect consumers by making credit cost transparent and comparable, rather than buried in marketing language. Regulation Z is the CFPB rule that carries out that goal today, spelling out exactly which numbers a lender must show and how.
In practice, "the disclosure" is not the sales brochure or the pitch deck. It is the numbers box on a retail installment contract or loan agreement, the part that states the actual cost of the credit in dollars and as a percentage rate. Marketing copy describing "low monthly payments" is not a disclosure. The numbers box is.
!Close-up of a financing disclosure document on a clipboard with a pen resting on it in daylight
Why should a contractor care about a form the lender fills out? Because the disclosure is the customer's only reliable record of what they actually agreed to pay. If your sales conversation and the disclosure tell two different stories, the customer trusts the paper less, and the contractor's name is usually the one they remember. For how fee structure interacts with what gets disclosed, see how dealer fees work and where they hide.
Does Truth in Lending apply to home improvement financing?
Yes. Regulation Z applies to most consumer credit extended for personal, family, or household purposes, including point-of-sale financing for battery storage, EV chargers, and water filtration, and in 2026 it generally covers consumer credit transactions of $73,400 or less (CFPB, Regulation Z and Regulation M threshold announcement, 2025). Loans secured by real property are covered regardless of amount.
The "creditor" under TILA is usually the lender that extends the credit and sets the repayment terms, not the contractor who sells and installs the project. That said, state retail installment sales acts frequently layer on top of federal law, and their disclosure content often mirrors TILA's requirements closely (Counsel Stack, Retail Installment Contracts: Disclosure Requirements).
This matters even though a contractor rarely signs the credit agreement itself. Most residential battery storage, EV charger, and water filtration point-of-sale loans sit well under the $73,400 threshold, so they fall squarely within Regulation Z's coverage. If your financing partner is originating consumer credit for a home project in this range, the disclosure rules apply in full, whether or not the contractor ever reads the fine print.
What has the CFPB flagged in solar and home-improvement loans?
The CFPB's Issue Spotlight on solar financing found that some lenders bake markup fees, commonly called dealer fees, into the loan principal at 10 to 30 percent of the cash price (and in some cases more than 50 percent) without clearly disclosing that markup, and separately misrepresent tax-credit eligibility and projected energy savings (CFPB, Issue Spotlight: Solar Financing, August 2024).
The CFPB named three specific risk areas: hidden markups folded into the loan amount, "net system cost" figures that display the price after a presumed 30% tax credit in large font while the actual loan amount appears in smaller print, and installers overstating future energy savings or production estimates. None of these findings are limited to solar. The same point-of-sale financing structure is used across battery storage, EV chargers, and water filtration, so the same disclosure gaps can show up in any of those verticals.
There is one more layer worth knowing. The CFPB finalized a rule covering Property Assessed Clean Energy (PACE) loans, home improvement financing repaid through property tax bills, that extends standard mortgage-style disclosures to those transactions, effective March 1, 2026 (CFPB, PACE final rule). In 2023, loans funded 58% of at-home residential solar purchases, underscoring how much of this market runs through financed transactions rather than cash (CFPB, Issue Spotlight: Solar Financing, 2024). For the pillar view of building a compliant program from the ground up, see the full 2026 contractor financing playbook.
Is a contractor personally liable for a lender's disclosure mistakes?
In most point-of-sale financing arrangements, the lender, not the contractor, is the "creditor" that carries TILA disclosure obligations and liability. A creditor who fails to disclose correctly can face actual damages, statutory damages, and attorney's fees under 15 U.S.C. § 1640 (Cornell Law, Legal Information Institute, 15 U.S.C. § 1640). The exact statutory damages figures vary by transaction type and are set in the statute itself, so a contractor with a specific liability question should read the current statutory text or ask counsel rather than rely on a rule of thumb.
Here is where "not the creditor" gets misread. It does not mean "no exposure." Verbal sales claims that contradict the written disclosure, an overstated savings projection, a promise of guaranteed approval, or a payment amount that changes at the signing table, are exactly the kind of practice the CFPB has flagged as harming consumers. Those claims can create separate reputational and, in some states, legal exposure for the contractor under general consumer-protection or unfair-trade-practices law, independent of the lender's TILA obligations.
> Our finding: Across the programs a direct lender like Eos Loan works with, the contractors who read the disclosure before offering a program are the ones least likely to field a customer complaint later, because the numbers the customer heard in the sales conversation already match the numbers on the paper. We frame that as a pattern we see, not a compliance guarantee.
This is general information, not legal advice; a contractor with specific liability questions should consult qualified counsel. For the structural version of this question, direct lender versus a chain of intermediaries, see the comparison later in this guide.
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What should a compliant financing disclosure include?
At minimum, a compliant consumer credit disclosure states the amount financed, the finance charge in dollars, the APR, the total of payments, and the payment schedule, given to the borrower in writing to keep before or at signing (eCFR, 12 CFR Part 1026; Counsel Stack, Retail Installment Contracts).
Think of it as four numbers a contractor should recognize on sight the moment they glance at any disclosure form:
- Amount financed. The dollar amount actually being lent to the customer.
- Finance charge. The dollar cost of credit, separate from the price of the equipment and labor.
- APR. The annual percentage rate, the standardized way to compare cost of credit across offers.
- Total of payments. What the customer pays in total, principal plus finance charge, over the life of the loan.
- Consumer Financial Protection Bureau, 12 CFR Part 1026 (Regulation Z), retrieved 2026-07-10, https://www.consumerfinance.gov/rules-policy/regulations/1026/
- Consumer Financial Protection Bureau, Issue Spotlight: Solar Financing (10-30%+ undisclosed markup fees; 58% of 2023 residential solar purchases financed with loans; tax-credit and savings-claim findings), August 2024, retrieved 2026-07-10, https://www.consumerfinance.gov/data-research/research-reports/issue-spotlight-solar-financing/
- Consumer Financial Protection Bureau, Agencies Announce Dollar Thresholds for Applicability of Truth in Lending and Consumer Leasing Rules (2026 threshold of $73,400), retrieved 2026-07-10, https://www.consumerfinance.gov/about-us/newsroom/agencies-announce-dollar-thresholds-for-applicability-of-truth-in-lending-and-consumer-leasing-rules-for-consumer-credit-and-lease-transactions-2025/
- Consumer Financial Protection Bureau, CFPB Finalizes Rule to Protect Homeowners on Solar Panel Loans and Other Home Improvement Loans Paid Back Through Property Taxes (PACE rule, effective March 1, 2026), retrieved 2026-07-10, https://www.consumerfinance.gov/about-us/newsroom/cfpb-finalizes-rule-to-protect-homeowners-on-solar-panel-loans-and-other-home-improvement-loans-paid-back-through-property-taxes/
- Cornell Law School, Legal Information Institute, 15 U.S.C. § 1640, retrieved 2026-07-10, https://www.law.cornell.edu/uscode/text/15/1640
- Electronic Code of Federal Regulations, 12 CFR Part 1026, retrieved 2026-07-10, https://www.ecfr.gov/current/title-12/chapter-X/part-1026
- Counsel Stack, Retail Installment Contracts: Disclosure Requirements, Interest Rates, and Consumer Rights, retrieved 2026-07-10, https://blog.counselstack.com/retail-installment-contracts-disclosure-requirements-interest-rates-consumer-rights/
- NerdWallet, Solar Loans and Solar Panel System Financing Options, retrieved 2026-07-10, https://www.nerdwallet.com/best/loans/personal-loans/solar-loans-solar-panel-system-financing-options
A retail installment contract is often labeled as such and includes a notice to the buyer summarizing these terms. If a dealer fee is part of the deal, it should appear as its own disclosed line, not folded silently into a marked-up equipment price. For the math behind how these numbers relate to each other, see how APR and total of payments are calculated.
How should a contractor vet a financing partner's disclosures?
Ask three questions before signing up for any financing program: does the disclosure show the dealer fee as a separate line, does the written APR match the rate quoted verbally, and does the lender fund and service the loan directly or route it through a third party (CFPB, Issue Spotlight: Solar Financing, 2024; NerdWallet, solar loan financing options, 2025).
Run any prospective partner through this short vetting checklist before you offer their program to a single customer:
1. Dealer fee disclosed as its own line item, not folded into a marked-up equipment price.
2. Written APR matches the sales conversation. If the number on the disclosure differs from what your team quotes verbally, that gap is a liability you are creating for yourself.
3. Direct lender versus marketplace. A direct lender funds and services the loan itself. A marketplace routes the deal through additional parties, adding hand-offs and places for terms to shift.
4. No verbal promises about tax credits or guaranteed approval. Both are documented CFPB concerns; approval and eligibility should always be stated as conditional.
5. State retail-installment-contract labeling present where applicable to the transaction type.
6. A clear post-close support process the customer can use if something looks wrong on their statement.
Most contractor-facing content on financing conflates "compliance" with "my lender handles it, I don't need to know this." The more useful framing: the contractor is usually not the creditor and is not personally liable for TILA disclosure content in most point-of-sale setups, but sloppy sales-side claims that contradict the paperwork are exactly what the CFPB has flagged as harming consumers and damaging reputations. Reading the disclosure is sales-risk management, not legal homework.
Eos Loan is a direct lender that funds and discloses its own paper, with no dealer fee at all, which is one example of what "fewer hand-offs to audit" looks like in practice. That is not a claim that any specific program is compliant; it is one factor a contractor can weigh in the vetting checklist above. For the structural comparison behind this point, see point-of-sale vs. marketplace vs. direct lender.
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Frequently Asked Questions
What is Regulation Z?
Regulation Z is the CFPB rule implementing the Truth in Lending Act, requiring lenders to disclose the finance charge, APR, amount financed, and total of payments in consumer credit transactions (CFPB, 12 CFR Part 1026). It applies to most point-of-sale financing offered to individual consumers.
Does Truth in Lending apply to battery storage, EV charger, or water filtration financing?
Yes. Most point-of-sale consumer financing for these projects is consumer credit for personal or household use and falls under TILA/Regulation Z, generally up to a $73,400 threshold in 2026 (CFPB, 2025 threshold announcement).
Is the contractor or the lender responsible for TILA disclosures?
The lender is generally the "creditor" responsible for accurate disclosures under TILA. Contractors are not typically the disclosing party, though verbal sales claims that contradict the written disclosure can still create separate reputational or legal risk (Cornell Law, 15 U.S.C. § 1640). This is general information, not legal advice.
What has the CFPB found wrong with some solar and home-improvement loan disclosures?
The CFPB found that some lenders bake 10 to 30 percent markup fees (and in some cases more) into the loan principal without clear disclosure, and separately misrepresent tax-credit eligibility and projected energy savings (CFPB, Issue Spotlight: Solar Financing, 2024).
How can a contractor quickly vet a financing partner's paperwork?
Confirm the dealer fee is disclosed as a separate line, the written APR matches what was quoted verbally, and whether the company funds loans directly or routes them through third parties (CFPB, Issue Spotlight: Solar Financing, 2024).
The bottom line before you offer a program
Financing disclosures are not paperwork to skim past. TILA/Regulation Z requires written disclosure of the finance charge, APR, amount financed, and total of payments. The CFPB has specifically flagged hidden markups and misleading tax-credit or savings claims in solar and home-improvement lending. Contractors are usually not the disclosing party, but they carry reputational risk when sales claims do not match the paperwork. A short vetting checklist protects both the contractor and the customer.
This is general information, not legal advice. Consult qualified counsel for program-specific or state-specific compliance questions. If you want to talk through what a financing program with no dealer fee and direct-lender disclosures looks like for your business, our team is available.
For the setup side of launching a program once you have vetted a partner, see disclosure requirements to vet before launch.
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Sources
About the author: Eduardo Donadi is the CEO of Eos Loan, the fintech built to finance essential projects (battery energy storage, EV chargers, and water filtration) for installers, contractors, and resellers across the United States.