Solar panels: lease vs. buy

Leasing is often convenient, but buying can provide long-term savings and increase your property value

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Solar panels have become increasingly popular over the years as a cost-effective, environmentally friendly way to get energy, but how you go about getting them can require some forethought.

Whether you should lease or buy your solar panel depends on your budget, preferences and long-term plans. We’ll dive into the logistics of leasing versus buying, who each option is best for and what you need to make an informed decision.

Key insights

  • Leasing solar panels costs less upfront, while purchasing them usually costs more out of pocket.
  • If you lease, the solar company handles panel maintenance, but if you buy, it’s your responsibility — which isn’t always a bad thing.
  • Owning solar panels can increase the value of your property, which you miss out on if you lease.
  • Overall, buying solar panels is usually the smarter choice if you’re not afraid of a long-term commitment, but leasing is a viable option if you’re more concerned with short-term benefits.

How people pay for solar panels

There are several ways to pay for solar panels, but the three most common ways are paying cash, financing and leasing. We broke down each method below to help you understand how they’re different.

  • Cash: Purchasing solar panels outright with cash requires a high upfront investment, but it means you can avoid interest payments and other financing costs. This translates to a higher return on investment (ROI) than with a loan or lease. Still, it’s not an option that everyone can afford, given how much solar panels cost.
  • Financing: One of the most accessible approaches to going solar is financing panels with a solar loan or manufacturer financing. Interest rates generally range from 3.99% to 16.99%, with repayment terms between five and 20 years. You may have to make a down payment, but many of the best solar financing companies offer options with 0% down.
  • Credit card: You can technically use a credit card to finance solar panels, but this is typically the most expensive option. Credit card interest rates extend up to around 36%, but it may be possible to qualify for a card with a 0% introductory APR (annual percentage rate) for between six months and two years. This can help you pay for your panels in multiple payments without accruing interest, but it doesn’t last long in the grand scheme of things.
  • Lease: Leasing solar panels allows you to install solar panels at your home with little to no upfront cost. However, your long-term savings may be lower because many solar leases include escalator clauses that increase costs over time.
  • Power purchase agreement: A power purchase agreement involves a developer installing solar panels on your home and operating them on your behalf. You then buy the power produced by the system at a given rate for a set period of time.

» MORE: Solar lease vs. solar PPA

Ultimately, how you pay for solar panels will impact how much you pay each month and your ROI.

Jay, a ConsumerAffairs reviewer from California, told us: “When I purchased my SunPower system I was told I would save money on electricity. 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.”

In contrast, Rob, a reviewer from Texas, found “the solar costs were financed and a very competitive rate. The solar loan is lower than our annual electric bill. Our highest bill after solar was the month we turned on our panels, $9. We have been getting negative electric bills for seven months.”

Leasing vs. purchasing solar panels

If we tighten our focus to the most common ways of paying for solar panels (cash, financing and leasing), the main decision you have to make comes down to whether you’d prefer to buy or lease your solar panels.

Who owns the system? The leasing company You
Upfront costs Low cost or no cost High cost (less with a loan)
Tax credit eligibility Ineligible Eligible
Lifetime savings Lower than with ownership Higher than with a lease
Monthly energy bills Lower than with conventional energy Lower than with conventional energy
Who’s responsible for maintenance? The leasing company You

Buying solar panels: pros and cons

Purchasing solar panels (whether with cash or a loan) offers long-term energy savings and a host of other potential benefits, but it requires a greater upfront investment. We’ve assembled some of the pros and cons of buying solar panels below to help you see if it’s the right strategy for you.

Buying Pros

  • Better long-term energy savings and ROI
  • Can increase your property value
  • Gives you access to tax credits and incentives
  • More financing options
  • Control over maintenance and repairs

Buying Cons

  • High upfront costs
  • You’re responsible for maintenance and repairs
  • You need to stay in your home long-term to reap the rewards

Pros of buying solar panels

Check out the main advantages of buying your solar panels. (You can get more details by clicking on each point.)

Owning solar panels can save you money in the long run, as they should eventually pay for themselves through energy savings. The average payback period for a home solar system is around 10 years if you take advantage of federal tax credits.

» MORE: What is solar panel ROI?

According to a study by Zillow, owning solar panels increases a home’s value by an average of about 4%. This increase varies by location, though, so your results may vary.

» MORE: Do solar panels increase home value?

Buying solar panels means you may qualify for federal and state incentives not available to people that lease.

» MORE: How does the federal solar tax credit work?

Payment options are more flexible when you buy solar panels instead of leasing them. You can use cash, take out a solar loan or opt for a secured personal loan — often with competitive interest rates.

» LEARN: How do solar loans work?

When you own solar panels, you control how and when maintenance and repairs get done. You also have the freedom to upgrade or add panels at any time. (With a lease, maintenance and repairs are completed by the leasing company pursuant to your lease agreement.)

While some people might prefer not to be responsible for their solar panels’ upkeep, relying on your leasing company to do the right thing might leave you wishing you had more control.

» MORE: Solar panel cleaning

Cons of buying solar panels

Check out the main disadvantages of buying your solar panels.

Getting a solar energy system for your home costs about $20,000 on average after federal tax incentives, depending on where you live and the size of the system. Most Americans simply can’t afford to pay that upfront.

That said, financing is generally available if you have a good credit score, and some solar panel companies do not even require a down payment.

If you buy solar panels, you are responsible for their upkeep and maintenance. Repairs can be costly, so research solar panel warranties and maintenance plans before buying.
The long-term return on investment you get when buying solar panels depends on how long you stay in your home. If you plan on selling your home before your solar panels have a chance to pay for themselves, purchasing panels may not be a good choice.

Solar panel leasing: pros and cons

Leasing solar panels often involves minimal upfront costs. Still, you’ll have less control over your system, and a lease may make it harder to sell your home. Take time to understand the pros and cons of solar panel leasing before committing to a years-long agreement.

Leasing Pros

  • Little to no upfront costs
  • Lower monthly payments
  • Good credit is not required for approval
  • Your leasing company handles upkeep

Leasing Cons

  • Your monthly payments may increase over time
  • You can’t choose where the panels go
  • You have less control over maintenance and repairs
  • You’re not eligible for the same rebates and incentives
  • Leasing makes your home difficult to sell

Pros of leasing solar panels

Check out the main advantages of leasing your solar panels.

Leasing solar panels generally requires no money upfront, making the switch to solar more accessible for many people. Some solar leases may require you to pay an installation fee, though.
Leasing solar panels can often mean lower monthly bills than you’d pay with a loan. Solar leases also generally include a performance guarantee, meaning you may receive credit if your panels underproduce on power.
You may not need as high of a credit score to qualify for a solar lease as you would for a solar loan. Instead, solar leasing companies often look at other factors, such as your roof’s condition and your past electricity bills, when evaluating your application.
When you lease a solar panel system, the leasing company is responsible for necessary maintenance and repairs. This can provide you peace of mind and help you save money on costly repairs in the future.

Just be sure to read reviews for your leasing company to see if they have a good track record of providing timely, effective upkeep. You don’t want to be stuck paying a monthly fee for solar panels that are out of commission while your maintenance company takes its time getting to repairs.

Cons of leasing solar panels

Check out the main disadvantages of leasing your solar panels.

Solar leases are tied to local utility retail rates and often include an “escalator” (also known as an escalation clause) that may increase your payments over time. That means your monthly costs may rise even when your solar panels produce the same amount of power.
You cannot choose the mounting locations for your solar panels if you lease them, which means that you may not be able to install the system in a way that is most beneficial for your home or that maximizes energy production.
When you lease solar panels, the leasing company assumes responsibility for ongoing maintenance, monitoring and repairs. If there is an issue with the system, you must wait for the leasing company to address it.

Also, if you want to make upgrades or add new panels during the lease period, you may not be able to due to restrictions in your lease agreement.

If you lease panels, you will not qualify for tax credits available to homeowners who purchase their panels. Homeowners who lease solar panels are also ineligible for net metering programs.
Leased solar panels likely won’t increase the value of your home, and potential buyers may even be intimidated by taking over your lease. If you decide to cancel the lease early to avoid this trouble, you may even incur hefty termination fees.

Should you lease or buy solar panels?

If you’re still on the fence as to whether you should lease or buy your solar panels, consider these factors:

  • Do you have the cash available for a down payment on a solar loan?
  • How much can you afford to pay each month?
  • Do you want control over panel placement and ongoing maintenance?
  • What kinds of tax credits and incentives are available to you?
  • How’s your credit? Can you qualify for a good interest rate if you finance?

According to Elliot Bailey of Sol Voltaics: “The best candidates for a solar loan are typically homeowners with good credit and steady income. Most lenders also require that the home have sufficient equity, as there may be additional costs associated with installation such as permits or labor fees. Once approved, the cost of the system can be paid off in installments over time — usually five to 20 years — while the owner reaps rewards from tax credits and other incentives offered by state and federal government programs.”

Who should buy solar panels?

If you’re an environmentally conscious homeowner who wants a long-term investment, purchasing solar panels may be the better option. By buying your solar panels, you should get better long-term savings and a quicker return on your investment. Investing in owning solar panels also gives you more control over the system and a greater sense of ownership. Plus, purchasing panels lets you take advantage of federal tax incentives.

Essentially, if you’re willing to deal with the initial expenses and ongoing maintenance that come with owning your solar panels, you should be able to reap greater financial rewards long-term (while simultaneously reducing your carbon footprint).

Who should lease solar panels?

If you prioritize flexibility and short-term cost efficiency, leasing solar panels may be the more appropriate choice.

Leasing solar panels is a viable option if you’re looking to reduce your carbon footprint and save money on energy bills, and a lease lets you do that without investing a large sum of money upfront. Moreover, leasing is a great way to start experiencing the benefits of solar energy without making a long-term commitment, like you would with a solar loan.

Find a Solar Energy partner near you.

    Bottom line

    When choosing between buying and leasing panels, consider your financial situation, location and long-term goals:

    • Solar panel leases provide a convenient option if you want to switch to solar energy without paying much upfront.
    • On the other hand, purchasing solar panels requires a substantial investment upfront that usually pays off in the long run.

    Ultimately, the choice between leasing and buying solar panels depends on your priorities. Either way, you can start by connecting with a reliable solar panel provider and scheduling a consultation. They can provide the necessary information and help you make an informed decision, guiding you through your financing, installation and maintenance options.

    ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:

    1. Zillow, “Homes With Solar Panels Sell for 4.1% More.” Accessed May 22, 2023.

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