Here’s a comparison of solar loans vs. leases for cost and benefits:
Cost Comparison
- Solar Loans
- Upfront cost: $15,000-$20,000+ (after federal tax credit)
- Monthly payments: 4-7% interest rates (occasionally up to 36%), typically lower than lease payments long-term
- Savings: Full eligibility for 30% federal tax credit + state incentives
- Total cost example: ~$20,000 system recouped through energy savings in 5-10 years
- Solar Leases/PPAs
- Upfront cost: $0-$5,000
- Monthly payments: $50-$250 with 2-3% annual escalator clauses
- Savings: 10-30% lower bills immediately, but no tax credits
- Total cost example: $7,200-$112,500 over 15-25 years
Key Benefits
| Factor | Solar Loan | Solar Lease |
|---|---|---|
| Ownership | Full system ownership | No ownership – only usage rights |
| Home value | +4.1% average value increase +$15,000 sale premiums |
No added value Lease transfers complicate sales |
| Maintenance | Owner responsibility (covered by 10-30yr warranties) | Provider handles all maintenance |
| Flexibility | Customizable systems Grid independence possible |
Fixed system specs Contract terms up to 25yrs |
| Tax Benefits | 30% federal tax credit + state incentives | No access to incentives |
When to Choose
- Opt for loans if:
- You want long-term savings (20-30 years of free power post-loan)
- You qualify for tax credits
- You plan to stay in the home 5+ years
- Consider leases if:
- You can’t claim tax credits (low tax liability)
- You need $0-down immediate savings
- You can’t secure loan approval
Most experts recommend loans for better financial returns, while leases serve niche cases with strict budget constraints.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-solar-loans-compare-to-solar-leases-in-terms-of-cost-and-benefits/
