Financing

How to pay for solar

Four options, very different economics. Here's how each one works and where the catches are.

Cash

Lowest lifetime cost. You own the system, claim any tax credit yourself, and avoid dealer fees. Downside: the largest up-front outlay.

Solar loan

You still own the system and claim incentives, but the installer typically adds a dealer fee (often 15-30%) to buy down the rate. Always compare the cash price to the financed price. Run it in the loan calculator.

Lease

A third party owns the system; you pay a fixed monthly amount to use it. No up-front cost and no maintenance responsibility, but you don't get the tax credit and the savings are smaller. Transferring the lease when you sell the home can be a hurdle.

PPA (power purchase agreement)

Similar to a lease, but you pay per kWh produced rather than a fixed amount. The rate usually escalates each year. Read the escalator carefully.

Bottom line

If you can pay cash or get a low-fee loan and you have tax liability, ownership almost always wins over 25 years. Compare the paths, then get quotes.

FAQ

Who gets the solar tax credit on a lease or PPA?

The company that owns the system, not you. With cash or a loan, you claim it (for installs that still qualify).

What is a solar dealer fee?

A charge installers add to financed deals to offset the lender's rate buydown. It can add 15-30% to the system price and is often not shown separately.

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