Financing a Solar System: Leases Vs Loans

The financial, environmental, and community advantages of solar energy systems make solar panels exceptionally appealing. Installing a solar photovoltaic (PV) system is a critical investment. If you choose not to buy your solar PV system outright, solar financing options—such as solar loans or a solar lease—can help you go solar and save cash on your electric bill.

Some of the key factors to consider in choosing between a solar lease and a solar loan are the relative expenditures and reliable generation of solar power.

Are you looking deeper into financing a solar system? Let’s focus on the choice between a lease and a loan.


Solar leases basically allow you to rent the solar PV system. They provide you the maximum financial advantages of installing a solar power system without paying for it up front. An outsider manages the system and offers you the power through a monthly bill. The appraised value of the house does not increase since the mortgage holder does not own the solar system.

The majority of the solar panels leases carry 20-year terms, and after the initial installation period, the hosts will either permit you to continue the arrangement in increments of one to five years, or they will discontinue your use of the solar system. The homeowner does not benefit from the free power that comes with the installation credit, despite the fact that most systems will deliver power for many more years.

The Concerns About Solar Leases:

With a lease, the third party owner (TPO) will install solar panels on your property and, in return, you will consent to pay a below-market rate to utilize the solar power for the term of the agreement.

Selecting a lease (or PPA) as your solar panel financing option will help you to save from 10 to 30% every month on your utility power bill, with no initial cash investment required.

The TPO will be in charge of keeping up the solar panels and, toward the end of the lease, will either remove them or offer the system to you at its market value.

Since the TPO owns the solar panel system, it will receive all refunds, charge credits, or other incentives offered by the federal government and your local utility providers.


Solar loans are an excellent solar panel financing alternative if you prefer to purchase your system. You can backload the whole cost of your system. Loan terms can range from one to twenty years, depending on the bank. As the system is completely under the control of the property owner, once the credit is paid off, all future power created by the system is free. Above all, the mortgage holder receives all federal, state, local, and local incentives.

This implies that the property owner who chooses a loan could pay back as little as only 70% of the expense of the system, after incentives.

The concerns about solar loans:

Monthly electric bills should be higher than the monthly loan installment payment, permitting you to begin saving cash quickly.

Save 40-70% on power costs over the lifetime of your system, as contrasted with doing nothing, by selecting a loan as your solar panel financing choice.

Solar loans have the same essential structure, terms, and conditions as other home improvement loans. Some states even offer sponsored solar energy credits, with financing costs below those in the business sector.

By eventually purchasing your system completely when you complete the repayment of the loan, you qualify for financial incentives like the federal investment tax credit (ITC). Interest on secured solar loans may likewise be deductible, making even more funds available to you almost immediately.

Analyze your financing options and find the best one for you!

Investigate more of the solar financing choices available to you, including solar loans and solar leases, before you settle on a financial product. Every situation is different, and deciding what is best for you and your property depends on an extensive variety of factors.

You can easily find numerous online companies—offering a great competition and an immense network of qualified solar installers—to give you the information needed to guarantee that you get the best value for the dollars you invest in your solar energy system.