Solar Panels: Lease vs. Buy

Leasing vs. buying solar panels

Leasing solar panels costs less upfront, while purchasing them usually costs more out of pocket.

Leasing solar panels

Leasing solar panels can be a budget-friendly way to go solar, with little to no upfront costs, lower monthly payments and potentially easier approval for those with lower credit scores. Also, your combined lease and utility costs should ideally be less than your current electricity bill. And if you lease, the solar company handles panel maintenance, but if you buy, it’s your responsibility.

But leasing comes with trade-offs. For instance, leasing means you don’t own the system. Instead, you're paying to use the energy it produces, usually through a long-term contract. And while you might initially have low monthly payments, payments could increase over time. Be mindful of any escalation clauses in the contract, which usually increase your monthly payment by 1% to 3% per year.

Buying solar panels

Owning solar panels offers long-term savings and a solid return on investment (ROI), with systems typically paying for themselves within about 10 years. Homeowners may also benefit from increased property value depending on where they live, plus full control over maintenance and upgrades.

On the downside, buying solar panels comes with high upfront costs and requires you to handle all maintenance and repairs. Your return on investment also depends on whether you stay in your home long enough for the system to pay for itself.

Also, considering that a typical 10 kilowatt (kW) solar energy system costs between $25,000 to $30,000, paying cash upfront is not an option that everyone can afford. Instead, many people opt to work with a solar financing company. Most of these companies require that the home have sufficient equity, as there may be additional costs associated with installation, such as permits or labor fees.

» MORE: Do solar panels increase home value?

Pros and cons of leasing vs. buying

How you pay for solar — leasing or buying — can dramatically impact your savings, flexibility and long-term returns. Consider the pros and cons of both leasing vs. buying solar panels.

Pros and cons of leasing

Compare the pros and cons of leasing solar panels:

Pros and cons of buying

Compare the pros and cons of buying solar panels:

Leasing vs. buying: who it’s best for

Solar leases are usually best for people who can’t buy upfront or prefer a low maintenance option, while solar loans can appeal more to environmentally conscious homeowners.

Who should lease solar panels

Solar leases can appeal to homeowners who can’t afford to buy upfront or prefer a low maintenance option. They’re also typically best for people who want flexibility and short-term cost efficiency.

Also, solar leases can help you reduce your carbon footprint and save money on utility bills without investing a large sum of money upfront. Plus, they’re a great way to experience solar power without making a long-term commitment like you would with a solar loan.

Who should buy solar panels

Buying solar panels is typically best for environmentally conscious homeowners who want a long-term renewable energy investment. By buying your solar panels, you should be able to save more over time and get a quicker return on your investment. You’ll also get more control over the system and a greater sense of ownership.

Note that, if you’re interested in financing solar panels, you’ll generally need a good credit history to qualify.

“The best candidates for a solar loan are typically homeowners with good credit and steady income,” said Elliot Bailey, CEO and chief editor of Sol Voltaics.

» MORE: Solar energy pros and cons

Customer reviews about leasing vs. buying

Going solar is generally worth it if you like the idea of lowering your monthly utility bills, helping the environment and gaining more energy independence. But it doesn’t work out for everyone.

What customers say about solar leasing

Some ConsumerAffairs reviewers were happy with their solar lease, while others were dissatisfied with misleading sales tactics, hidden fees and a lack of transparency in contracts, among other issues.

Bonnie, a reviewer in Vermont, said they overall had a good experience with their solar company and lease, and that they were understanding of any issues since it’s a fairly new technology.

“[The solar company was] very accommodating,” Bonnie said. “They tried to resolve issues as quickly as possible, and they never left me hanging. If I had a question, they got back to me. So far, I'm happy with them. And I got a 25-year contract with them, so I'm hoping it continues that way.”

Dennis, a reviewer in California, said they were initially happy with their solar lease and the representative, but they had issues with getting the system installed in a timely manner.

Carol, a reviewer in Arizona, said: “We have had solar for 10 years now with a lease. When the system goes down for mechanical failure we have had nothing but run around. [...] It takes more than [three] months to get the mechanical fixed as well.”

What customers say about solar loans

Rob, a reviewer in Texas, was happy with their low utility bills after financing a solar loan.

“The solar costs were financed [at] a very competitive rate,” Rob said. “The solar loan is lower than our annual electric bill. Our highest bill after solar was the month we turned on our panels[:] $9.00. We have been getting negative electric bills for [seven] months.”

In comparison, Jay, a reviewer in California, said they had much higher utility costs with a solar loan.

“When I purchased my SunPower system I was told I would save money on electricity,” Jay said. “Because of the overpriced system, I am paying more for the loan payment than I save from the utility. Interest payments alone are over [$1,000] per year and this will continue for a long, long time.”

Bottom line: Should you lease or buy solar panels?

Previously, the biggest advantage to buying or financing solar panels was the federal tax credit and long-term savings. But now that the credit has expired, leasing can be a more appealing option for homeowners who want to go solar with little or no upfront cost. Ultimately, the choice between leasing and buying solar panels depends on your priorities, preferences and budget.

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