The right payment path depends on your budget, credit, tax situation, ownership goals, and how long you expect to remain in the home.
Cash purchase
Paying cash typically avoids loan interest and dealer fees, and the homeowner owns the equipment. It also requires the largest upfront investment, so compare solar with other uses for that money and retain an appropriate emergency reserve.
Solar loan
A solar loan spreads the cost over time while allowing the homeowner to own the system. Compare the cash price with the financed price, because interest rates, origination or dealer fees, term length, and prepayment rules can materially affect total cost.
- What is the annual percentage rate?
- Are fees included in the system price?
- Does the payment change after an introductory period?
- Is there a prepayment penalty?
- What happens if the home is sold?
Lease or power purchase agreement
With a lease or power purchase agreement, a third party generally owns the system. The homeowner pays a fixed lease amount or pays for the electricity produced, depending on the contract. Availability and terms vary by market.
- Does the payment increase each year?
- Who receives available incentives?
- Who maintains and monitors the equipment?
- What are the transfer, buyout, and removal terms?
- How long is the agreement?
Review incentives carefully
Tax credits, rebates, and other programs may depend on ownership, eligibility, tax liability, location, equipment, and current rules. Ask a qualified tax professional about your circumstances and avoid treating an estimated incentive as guaranteed cash.
Use an apples-to-apples comparison
Request the cash price, financed price, estimated total of payments, production estimate, warranty coverage, and contract transfer terms. A responsible comparison also considers conservative utility-rate assumptions and possible changes in household usage.