Compare and contrast: buying and leasing solar

There are practical differences in cost, maintenance, terms, opportunities for financial offsets, and savings/returns on investment, depending on the financing decision that you make

Installation cost

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Solar loan/cash purchase

  • Solar power systems can cost $15,000 to $30,000 before rebates and incentives.
  • Cash rebates can reduce the total cost by up to 50 percent. Most solar installers will manage the paperwork and adjust the purchase price to reflect the net amount.
Maintenance

Solar loan/cash purchase

  • You own the system and are responsible for maintaining it. Note that solar equipment is durable and carries warrantees, so you won’t have much maintenance to worry about.
  • Your purchase may not include an app to track your system’s performance.
Terms

Solar loan

  • Loans are generally available for 10 to 20 year terms, with interest rates ranging from 3 percent to 8 percent if you have a FICO credit score of 640 or above.

Savings and return on investment

Solar loan/cash purchase

  • You can save between 40 percent and 70 percent on electricity costs over the lifetime of your solar panel system, depending on your property and the incentives in your state.
  • You receive free electricity for the life of the solar energy system (usually 25 to 30 years).

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Solar lease/PPA

  • You can get a solar energy system for little or no money down.
  • You don’t qualify for tax credits, rebates, or incentives – those belong to the third party owner of the system.

Solar lease/PPA

  • The solar company owns and maintains the solar power system.
  • Most leases include free apps that track the performance of your system.

Solar lease/PPA

  • Solar leases and PPAs are generally for 20 to 25 years, at which point you can renew your agreement or purchase the system outright.

Solar lease/PPA

  • You can save between 10 percent and 30 percent off the prices you pay your utility for electricity, depending on your property and the incentives in your state.