The Four Ways to Go Solar
Every homeowner considering solar faces a fundamental decision: own the system or let someone else own it. Ownership (cash purchase or solar loan) captures the full financial benefits. Third-party ownership (lease or PPA) eliminates upfront cost but shares the savings. Understanding the tradeoffs is critical to making the right choice.
Head-to-Head Comparison
| Factor | Cash Purchase | Solar Loan | Solar Lease | PPA |
|---|---|---|---|---|
| Upfront cost | $14,000–$25,000 | $0–$5,000 | $0 | $0 |
| Federal ITC (30%) | You claim | You claim | Company claims | Company claims |
| Monthly payment | None | $80–$200 | $80–$150 fixed | Per kWh rate |
| 25-year savings | $40,000–$80,000 | $25,000–$50,000 | $10,000–$25,000 | $10,000–$25,000 |
| System ownership | You own | You own | Company owns | Company owns |
| Home value impact | +3–4% | +3–4% | Minimal/complex | Minimal/complex |
| Maintenance | Your responsibility | Your responsibility | Company handles | Company handles |
Cash Purchase: Maximum Savings
Paying cash eliminates interest costs and captures the entire financial benefit of solar. You claim the 30% federal ITC directly, own the system outright, and every kWh produced saves you the full retail electricity rate. Cash buyers see the shortest payback periods (5–9 years) and highest lifetime returns.
The downside is the significant upfront investment. After the ITC, a typical system still costs $14,000–$18,000 out of pocket. For homeowners with the capital, cash purchase delivers unmatched ROI.
When Cash Purchase Makes Sense
- You have $15,000–$25,000 in available savings
- You plan to stay in the home 7+ years
- You want maximum long-term savings
- You have sufficient tax liability to use the full ITC
Solar Loan: Ownership Without the Upfront Cost
Solar loans let you own the system with little to no money down. You still claim the ITC and build equity in the system. Monthly loan payments typically run $80–$200 depending on system size, loan term (10–25 years), and interest rate (4–9%).
The critical factor is the loan structure. Watch for dealer fees — many solar loans include 15–30% hidden fees rolled into the loan principal, dramatically increasing your total cost. A $20,000 system with a 25% dealer fee becomes a $25,000 loan. Always ask for the loan's APR and total cost of borrowing.
Solar Lease: Simplicity at a Cost
With a lease, a solar company installs and owns the system on your roof. You pay a fixed monthly fee ($80–$150) for the electricity it produces. The company claims the ITC, handles maintenance, and monitors performance. Most leases run 20–25 years with 1–3% annual escalators built in.
Leasing makes sense when you have no upfront capital, don't want maintenance responsibility, have low tax liability (can't use the ITC), or plan to move within 5–7 years. However, the long-term savings are 40–60% less than buying.
Impact on Home Sale
Owned solar systems increase home value by an average of 3–4% according to the Lawrence Berkeley National Laboratory. Leased systems complicate sales — the buyer must either assume the lease (with credit approval) or you must buy out the remaining lease term, which can cost $5,000–$15,000.
Our Recommendation
For most homeowners who plan to stay in their home 7+ years, buying with cash or a well-structured loan delivers significantly better financial outcomes. The 30% ITC, rising electricity rates, and 25-year system life make ownership the superior choice in most markets. Use our solar calculator to compare lease vs. buy scenarios for your specific situation and check your state page for available incentives.