Is It Better To Buy Or Lease Solar Panels
Leasing solar panels is a way to invest in solar power without having to lay out a large sum of money upfront. It makes rooftop solar power more accessible to people on tight budgets at the expense of long-term savings.
is it better to buy or lease solar panels
Additionally, buying and installing solar panels increases the value of your home, making it possible to recoup most of your investment should you decide to sell your home down the road. Solar panels also make your home more attractive to potential buyers, which makes it easier to sell your home in a competitive market. New owners get to enjoy the lowered electricity costs of a home with solar panels without the hassle of buying and installing them, making homes with rooftop solar especially attractive to first-time home buyers.
The primary benefit to leasing solar panels is that it reduces the initial cash outlay, making it possible for more people to invest in renewable energy for their home. Unfortunately, the tradeoff is fewer cumulative savings and limited access to solar tax credits and rebate programs.
Buying solar panels is the best way for most homeowners to invest in a residential solar panel installation. It gives you control over your system, saves you more money overall, and lets you take advantage of the federal tax credit and any state incentive programs offered in your jurisdiction. Solar loans also usually only take 5 to 15 years to pay off, and the payments stay the same for the entire duration of the loan.
The bottom line is that buying solar panels leads to more financial benefits than leasing them, despite the higher upfront costs that come with purchasing. If you can afford to make monthly lease payments, you can most likely afford to make a monthly loan payment instead. The benefits are greater lifetime savings, complete control of your solar system, and an increased home value.
There are many downsides to leasing solar panels, but the biggest one is reduced electricity savings in the long run. When your lease is up, your electric bill returns to normal, but when you finish paying off a solar loan, your electricity remains free.
A power purchase agreement, or solar PPA, is an agreement to purchase the electricity the panels generate, so your monthly payment depends on how much energy you use. PPAs are similar to paying the electric company for the energy you use each month per kilowatt-hour, only you pay the solar panel provider instead.
If you are interested in finding the best solar panels to power your home and help the environment, the sticker shock may give you second thoughts. However, there is another option: Leasing solar panels can allow you to switch to solar energy without the upfront investment.
Leasing solar panels makes the switch to solar energy more attainable for customers who may not have the cash reserves required for the upfront investment in solar panels. However, unlike buying solar panels, or using a payment plan toward the purchase of solar panels, leasing solar panels means you do not own them. Rather, a third party owns the equipment.
On average, leasing solar panels will cost between $50 and $250 per month. This cost is determined by multiple factors, i.e., how much energy you use, the company, your location and your credit score. Plus, some solar companies require a down payment, while others allow you to lease with a $0-down agreement. These costs should be considered when determining if you should lease a solar panel system.
There are a few ways to look at the payment options available for buying or leasing solar panels. In considering these options, the biggest factor may be how long you plan to stay in the home and what money you have available to invest in the solar panels.
On average, solar loans last about 20 years, although some are available for short periods of time. Considering the average payback period for people who own solar panels is seven to 10 years, owning is ultimately the better way to save money.
That means you will ultimately end up spending more than the upfront cash rate for the solar panel. The difference between getting a solar loan and using a solar lease is that, with a loan, you own the system. If you are interested in a solar loan, you will need to shop around for the best rates and terms.
With a solar lease, you do not own the system and therefore do not qualify for government or private rebates or incentives for the solar panels. Depending on where you live, the cash-based incentives may be significant enough to make purchasing solar panels a much better option.
Although solar panels in general add value to a home, a home with leased solar panels can complicate a real estate transaction. If the panels cannot be moved, or the lease cannot be transferred to the new owner (either because they are disinterested or the lease originator will not agree), then you may have to pay more to break the contract. Advertisement THIS IS AN ADVERTISEMENT AND NOT EDITORIAL CONTENT. Please note that we do receive compensation for any products you buy or sign up to via this advertisement, and that compensation impacts the ranking and placement of any offers listed herein. We do not present information about every offer available. The information and savings numbers depicted above are for demonstration purposes only, and your results may vary. Compare Quotes From Top-rated Solar Panel Installers
Depending on the terms of the solar lease, you may be able to get solar panels up and running on your home for little to no money down. Although you will continue to make payments throughout the term of the lease, you will also save money through your utility bill.
Whether you use cash or a private loan for solar panels, the amount you have to pay to own solar panels is not insignificant. If you do not have the available funds for a cash purchase, then you will pay more over the life of a loan in interest.
Based on the Investment Tax Credit, also known as the federal solar tax credit, you can deduct 26% of the cost of installing solar panels on your home from your federal taxes if you own the system. This credit is guaranteed through 2022.
Depending on your state, you may or may not be eligible for a tax credit for the purchase of solar panels. Because cash incentives are one of the biggest benefits of purchasing solar panels, then leasing may have an advantage if your state does not offer a tax credit.
When you lease solar panels, you get the benefits of reducing your utility bills and helping the environment without dramatically affecting your savings at one time. Depending on the lease program and terms, you may be able to buy the solar panels at the end of the agreement.Best Solar Companies By States And Cities
Owning or leasing solar panels both allow homeowners to enjoy utility bill savings while helping the environment. Leasing is better if you want to get started with solar without a large initial investment while owning is the best way to save money long-term.
Each method provides you with different benefits and drawbacks for your solar power system, especially in terms of financial goals, responsibilities, and ownership. To truly determine which one is right for your home and budget, you need to understand the difference between solar leasing and buying solar panels.
A solar lease is a financial arrangement where the company that installs your solar panel system retains ownership, and you pay a fixed monthly amount to use the system and receive any electricity it produces.
A solar lease and solar PPA are fundamentally the same product. You enter into a contract with a solar company to have them install a solar energy system on your roof, and you get to use the solar power that the system generates in your home, while they retain ownership.
The decision over whether to purchase or lease solar often comes down to your current financial situation and long-term housing plans. Buying vs leasing solar panels are both ideal options in different situations, so you should thoroughly examine the pros and cons of leasing vs buying solar panels to determine which is right for your needs.
A big reason for buying solar vs leasing is that buying your solar panels outright ensures significant long-term savings. Your solar panel system typically generates electricity for 25+ years, which helps lower your energy usage and reduce your electrical energy bills.
Whether you buy the panels or get a loan, you will typically reach a point in 7 to 10 years where the amount of money you have saved equals the amount of money you paid for the panels. This is known as the solar payback period. Once you clear this period, you should start to see even greater savings on your monthly energy costs than ever before.
If you choose to lease or sign a PPA, your total savings will likely be more modest, as you will still pay the solar installer every month of your lease period, with no breaks or end date. Additionally, many leases and PPAs contain an escalator clause that can annually increase your monthly payments over the life of the agreement, which is usually 20 years, and sometimes longer.
While you can still sell your home if you sign a solar lease or PPA, your contract with the solar company can make the process more difficult. Since the solar installer technically owns the panels on your home, they have to be involved in any conversations over the transfer of ownership. You have two primary options for negotiating the terms of your deal:
You should discuss the full details of both options with your solar company if you choose a lease or PPA, as the financing of your solar power will play a large part in the process you follow when selling your home.
If you lease, the solar installer gets the Federal Solar Tax Credit and any related state incentives because they own the panels. You have to get approval from the solar company to enroll in net metering, and because they own the panels, they reap most of those benefits, not you.
One of the big advantages of leasing solar panels vs owning is that the solar installer bears the full cost of installation. Once you accept their terms and conditions, they will install the solar panel system on your roof at little to no upfront cost. 041b061a72