Investing in solar is a smart investment. It’s also an expensive one. But, it’s well worth the investment when you consider the benefits. Not everyone can just pay cash for solar panels, so there are options including leasing or buying.
There are several financing options, like solar leases, solar loans, and financing from your bank or the solar company. But how do you know what is right for you?
Should I Buy or Lease
While not everyone is in a position to pay for solar panels in full, buying them is still the better option. Your savings will be much better and you will not be locked into the monthly payments for many years.
The main difference between buying and leasing solar panels is who owns the system. When you buy solar panels, whether it be with cash or through a solar loan, you own the panels that are on your house.
If you opt to lease or choose to go with a solar power purchase agreement (solar PPA), you may not have to pay any upfront costs to install solar panels on your roof. Instead, a solar company installs and owns the solar system.
When you own the solar panels, the maintenance costs and upkeep are on you. The good news is, there really isn’t any. Once they are installed, they simply get on with their job of gathering solar energy and storing it up for you to use.
The leasing options mean that the company you lease them from owns them until they are paid off. That also means that the onus of maintenance is also on them.
That might seem like a good deal, and if you have a lot of problems with them it may well be, but as they tend to need little to no attention, you can likely worry about that yourself.
The whole reason you want to install solar panels is to save money on your energy bill and leave a smaller carbon footprint. Whether you lease or buy solar panels, you will save money on your energy bill.
However, when you buy the system outright, your long-term savings will be significantly bigger. Taking out a solar loan will also give you much greater long-term savings than if you lease solar panels.
When you purchase solar panels, you pay off the system immediately and then don’t have to worry about monthly payments. With a solar lease, on the other hand, you are locked into monthly lease payments for 20 years, sometimes more, depending on the lease term.
You will also increase the value of your home. If you don’t own the panels, there will be an outstanding debt on your home and possibly a lien. This will make it difficult if you list your home for sale, as your solar company will have the option of selling you the contract or removing the panels.
Solar leases usually include a price escalator, which outlines how much the monthly lease payments will increase each year. This means that you will pay more in the third year of being in your lease than you did in the first year of having your lease.
Get Expert Advice
It can seem like a great deal, leasing solar panels, when you get the panels and the savings with nothing down. But you don’t save anywhere near as much and you are going to be locked in for many years to come.