Solar Lease vs. Loan vs. Cash: How to Pay for Solar Panels
Quick answer: Paying cash usually saves the most over the life of the system. A loan lets you own the panels without paying up front, but interest and hidden fees can eat into savings. A lease or PPA costs little or nothing up front and the company handles upkeep, but you save less and sign a 20- to 25-year contract.
There are four common ways to pay for home solar: cash, a loan, a lease or a power purchase agreement (PPA). The first two mean you own the panels. With the last two, a solar company owns them and you pay to use the power they make.
The choice matters more in 2026 than it used to. The 30% federal tax credit for homeowners ended for systems installed after 2025, but companies that own systems can still claim a business credit for now. That has shifted some of the math toward leases and PPAs, at least on price.
The four options side by side
| Cash | Loan | Lease | PPA | |
|---|---|---|---|---|
| Who owns the panels | You | You | Solar company | Solar company |
| Upfront cost | Full price | Little or none | Little or none | Little or none |
| What you pay over time | Nothing | Monthly loan payment | Fixed monthly fee, often rising each year | A price for each kWh the panels produce, often rising each year |
| Repairs and monitoring | You, with warranty help | You, with warranty help | Usually the company | Usually the company |
| Typical length | None | 8 to 25 years | 20 to 25 years | 20 to 25 years |
| If you sell your home | System goes with the house | Loan may need to be paid off or transferred | Buyer takes over the lease or you buy it out | Buyer takes over the contract or you buy it out |
Paying cash
Paying cash usually saves the most money over the life of the system, because there’s no interest, no financing fees and no company taking a cut of the savings. It’s also the simplest to price. You can compare quotes directly on price per watt, which averaged $2.60 in EnergySage’s September 2026 data.
Financing costs can be bigger than they look. Lawrence Berkeley National Laboratory found that the median price of loan-financed home systems installed in 2024 was about $4.70 per watt, compared with about $3.50 for systems bought with cash. Fees built into loans explain much of that gap.
Owning the system also means it can add to your home’s value. A 2019 Zillow analysis found that homes with solar sold for about 4.1% more on average. See how solar affects property value for the details and caveats.
The downside is obvious: you need the money up front, and without the federal credit it takes longer to earn it back. Our guide to solar payback periods walks through the math.
Solar loans
A loan lets you own the system without paying for it all at once. According to the Consumer Financial Protection Bureau, solar loan terms typically run 8 to 25 years. EnergySage reported a median solar loan rate of about 7.5% in the first half of 2025.
The rate isn’t the whole story. The CFPB found that many solar loans carry hidden “dealer fees,” usually 10% to 30% of the cash price and sometimes more. These are often built into the system price, so a loan advertised at a low rate can still cost a lot more than paying cash. Always ask for the cash price and the financed price side by side.
Also check how the loan was designed. The CFPB found it was common for solar loans to jump to a higher monthly payment around the 19th month unless the borrower paid down about 30% of the balance, the size of the old tax credit. Homeowners who installed after 2025 won’t get that credit, so a loan built around it may not make sense.
Some people use a home equity loan or line of credit instead. The rate may be lower, but your house secures the debt.
Leases and PPAs
With a lease, you pay a set monthly amount to use the system. With a PPA, you pay a set price for each kWh the panels produce, so your bill goes up and down with the sun. In both cases the company owns, insures and maintains the equipment, and you usually pay little or nothing up front.
The company can still claim the federal business credit (Section 48E), so some of that value may show up in your price. Projects that start construction after July 4, 2026 generally have to be in service by the end of 2027 to get it, so lease and PPA pricing could change after that.
Some things to know before signing:
- Escalators. Many contracts raise your payment 1% to 3% a year. If your utility’s rates rise more slowly, your savings shrink over time.
- Length. Contracts usually run 20 to 25 years. At the end, the options usually include buying the system, renewing the contract or having the company remove the panels.
- Selling your home. The buyer has to qualify for and agree to take over the contract, or you have to buy it out. A 2017 Berkeley Lab study of California sales found no price premium for homes with leased systems.
- Savings are smaller. The company needs to make money on the deal, so your savings over the contract are usually lower than if you’d bought the same system with cash.
Be careful with offers of “free” solar. The Federal Trade Commission says offers of free or no-cost solar panels are scams. A lease or PPA with no money down is still a long contract you pay for. Our article on free solar panels covers how these pitches work.
Which one fits your situation?
Cash tends to make sense if you have the savings, plan to stay in your home for many years and want the biggest long-term return. A loan can work if you want to own the system but don’t want to spend savings, as long as the total cost with fees still leaves you ahead. A lease or PPA can suit someone who wants lower bills with no upfront cost or upkeep and is comfortable with a long contract and smaller savings.
Whichever way you go, get several quotes and read the full contract before signing. Our guide to comparing solar quotes lists what to check, and the solar calculator gives a rough idea of what a cash purchase would save.
Questions to ask before you sign
- What is the total cost over the full term, including all fees?
- For a loan: what is the cash price, and how much of the financed price is a dealer fee? Does the payment change if I don’t make a large early payment?
- For a lease or PPA: how much does the payment rise each year, and what are my options at the end?
- What happens if I sell the house or the company goes out of business?
- Who pays to remove and reinstall the panels if the roof needs work?
- Does the savings estimate assume any tax credit I can’t actually claim?
Sources
- CFPB: Issue spotlight on solar financing
- Lawrence Berkeley National Laboratory: Distributed solar and storage, 2025 data update
- EnergySage: Solar leases
- EnergySage: Solar panel cost data
- IRS: FAQs on credit changes under the One Big Beautiful Bill
- Berkeley Lab: Report on sale prices of homes with solar
- Zillow: Homes with solar panels sell for 4.1% more
- FTC: Don’t waste your energy on a solar scam
