So you have decided to go solar. How are you going to pay for this system. Well, there are a couple ways of doing that. Below we will talk through Cash VS loan VS Lease/PPA. Our sales associates are more than happy to walk through all the options including a the pros and cons of a lease or PPA.
Why Consider a Cash Purchase?
Buying your solar system with cash has some great advantages, even though it requires a bigger upfront payment. Here’s why it could be a good choice:
When you pay cash for a solar system, you own it completely. This means you own all the energy it produces, and you don’t have to worry about making monthly payments. While paying upfront can be expensive, it usually pays off faster than other options, because the cost per kilowatt hour (the energy your system produces) is the lowest. Plus, when you pay in cash, you can also take advantage of a tax benefit called the Investment Tax Credit (ITC).
Benefits of a Cash Purchase:
- You own the solar system – Once you pay for it, it’s yours, and you get to keep all the energy it generates.
- No monthly payments – There are no loans or bills to pay each month, which means your costs are lower in the long run.
- You get the Investment Tax Credit – The government offers a tax credit that can reduce your taxes when you purchase your system in cash.
- Increases home value – Studies show that owning solar can raise the value of your home.
- Quick return on investment – While the upfront cost is high, you’ll start saving money quickly because you don’t have monthly electric bills.
- Lowest cost per kilowatt hour – Owning your system means you’ll pay the least for the electricity it generates, making it the most cost-effective choice over time.
Why Consider a Solar Loan?
Not everyone has the cash to buy a solar system upfront, but that doesn’t mean you can’t still go solar. If you don’t want to make a large payment right away, taking out a solar loan can be a great option. With a loan, you can enjoy many of the same benefits as a cash purchase, but without the big initial cost.
Financing your solar system lets you own it while spreading out the payments. Instead of paying high electric bills to your utility company every month, you’ll make smaller monthly payments on your loan. Whether you use a loan from your bank or one of our trusted loan partners, we’ll help guide you through the process to find the loan option that works best for you.
Loan Options Include:
- Self-financing (e.g., HELOC) – You can use a Home Equity Line of Credit (HELOC) to fund your solar system.
- Solar Loans – We also work with loan partners who specialize in solar financing.
Benefits of Using a Loan for Solar:
- You still own the system – Just like with a cash purchase, you’ll own your solar system and benefit from the energy it generates.
- You get the Investment Tax Credit – You can still claim the ITC when you finance your system.
- No large upfront costs – With a loan, you don’t have to pay a huge amount of money upfront.
- No prepayment penalty – Many solar loans don’t charge fees if you decide to pay off your loan early.
- Loans may be transferrable – If you move, some loans can be transferred to the new owner, so you won’t have to worry about paying off the rest of the loan yourself.
How a Solar Lease Works
A solar lease is a financing option where you rent the solar system installed on your home. Instead of buying the solar system outright or financing it with a loan, you agree to a contract with a solar company to lease the system for a set number of years, usually between 20 and 25 years.
Here’s how it works:
- Installation and Ownership: The solar company owns and installs the solar panels on your roof. You don’t pay upfront costs for the system, but you do pay a monthly lease payment for using the solar power it generates.
- Fixed Monthly Payment: You agree to a fixed monthly lease payment for the duration of the lease term. This payment covers the use of the solar system and is usually lower than what you would pay for your regular electricity bill (from the utility company). Some leases even have a payment structure that’s based on the amount of energy the system produces (this is sometimes called a Power Purchase Agreement or PPA).
- System Maintenance: The solar company is responsible for maintaining, repairing, and monitoring the system during the lease period. This means you won’t have to worry about system upkeep or fixing problems that may arise.
- No Ownership: Since you’re renting the system, you don’t own it. The solar company owns the panels and the energy they produce. At the end of the lease, you can either extend the lease, purchase the system at a discounted price, or have the system removed.