Is It Better to Buy or Lease Solar Panels?
February 25 2021
Whether you decide to buy or lease solar panels will depend heavily on your specific financial situation. What’s best for one homeowner might not be best for another. Greenlife Solar is here to help you decide by comparing leasing vs. buying solar panels.
We’ll cover both buying and leasing solar panels pros and cons. We’ll also prepare you for what to expect and go over the long-term effects of each.
Greenlife Solar is your go-to resource for everything solar-related. Whether you’re ready to install or are just getting started shopping around, we can help you find the right option for your home. Find out whether you should buy or lease solar panels here.
Leasing vs. Buying Solar Panels
Before you commit to solar, ask yourself, “Should I buy or lease solar panels?”
The main difference between leasing vs. buying solar panels is that with leasing, a third party owns the system. In contrast, buying gives the homeowner ownership. They may either own it outright (purchased with one upfront payment) or with the help of a solar loan (paid back over time with interest).
While this may seem like a small distinction, it affects everything from maintenance to financial offsets to savings and overall costs.
Let’s go over the pros and cons of leasing vs. buying solar panels:
Leasing Solar Panels Pros and Cons
A solar lease or PPA is a good option for homeowners who want to avoid large upfront costs while still reaping the benefits of lowered electricity costs. Leasing is essentially like renting. You’ll pay a monthly fee to use solar electricity from the panels. This monthly fee will be lower than your current electricity bill.
The cost to lease solar panels is continual over the term of the lease, which is typically 20 years.
You may want to lease solar panels if:
- You simply want to pay less for electricity and are largely uninterested in maximizing the full financial benefits of solar panels.
- You don’t want to pay for any maintenance or repairs that your panels may need. (Keep in mind that not all problems are covered by maintenance plans from leasing companies. Learn more here.)
- You aren’t eligible for federal or state tax incentives.
The cons of leasing solar panels include:
- You’ll only save 10 to 30 percent off utility costs, compared to the 40 to 70 percent you save with a solar loan or cash purchase.
- You don’t own the system. That means you won’t get the financial benefits that come with ownership, like increased home value.
At the end of the day, the cost to lease solar panels is easier for many homeowners to commit to. If you choose to lease solar panels, you can get a system for little to no money down. Purchasing solar panels requires a much higher initial investment. Still, while the cost to lease solar panels may be less upfront, you’ll pay more in the long run.
Keep in mind that you also have the option to sign a PPA, or power purchase equipment, which is very similar to a solar lease. A PPA charges for electricity at a set per-kWh price, while a lease charges you a fixed monthly payment.
Buying Solar Panels Pros and Cons
Now that we’ve gone over leasing solar panels pros and cons, let’s address purchasing pros and cons.
If you can afford the upfront cost, purchasing solar panels is the best choice. That way, if your system fully eliminates electricity costs, you’ll just pocket the savings.
Keep in mind that while solar loans break down the overall cost into manageable chunks, they still require a down payment and interest. Most solar loans have 10 to 20-year terms with 3 to 8 percent interest rates. Over time, you’ll pay much more than you would’ve if you’d paid the entire cost of the system upfront.
Purchasing solar panels upfront might be for you if:
- You have a large sum of money that you can invest without financial stress. Solar systems typically cost between $15,000 and $20,000 after tax incentives. If this is affordable for you, the best option is to purchase the system outright.
You may want a solar loan if:
- You aren’t able to pay the full cost of the solar system upfront.
- You want the financial benefits of ownership.
- You want access to savings from tax incentives.
On the other hand, solar loans have some cons:
- You are responsible for maintaining your system. (Luckily, most systems come with warranties).
- You have to pay interest, costing you money for the duration of the loan.
Learn more about solar loans here.
Finding a Fit for Your Home
Keep in mind that not all solar companies provide the option to lease solar panels. Also, PPAs are not legally permitted in certain areas. Once you’ve compared the logistics of leasing vs. buying solar panels, you’ll need to find out which options are available to you.
Before you buy or lease solar panels, it’s important to compare installers and pricing. That’s where Greenlife Solar comes in. We can help you compare free quotes from solar installation companies in your area.
These companies will be able to give you a better idea of how much your system will cost. Use Greenlife Solar to find the best deal on residential solar systems in your area.
Whether you want to buy or lease solar panels, we can help. Get started today.
