If you’re thinking about going solar, choosing between a solar loan and a solar lease is one of your most important decisions. Some may be able to simply buy solar power systems with cash, but that might not be comfortable for everyone. This page will focus on the benefits of loaning and leasing. Of course, our Havasu Solar professionals know the benefits if each and it’s not complicated at all.
Solar leasing is often sold on the idea that you can pay as little as $0 down and then have electricity bill savings that are greater than your monthly solar leasing payments forever, or until the end of the solar leasing contract, which is typically 15 to 20 years.
Solar loans, however, are also available for as little as $0 down across the United States.
What Are the Downfalls?
A lot of people rail on solar leasing because of the simple assumption that solar leasing companies are profiting from their customers, taking away some of the money that homeowners could be saving from going solar by themselves. Compared to paying cash, homeowners certainly won’t save or make as much money, but solar leasing competes more with solar loans than paying in cash. If you got a loan for your solar system, you would have to pay a good bit of interest, which is essentially the same as giving away some of your savings to a solar leasing company.
Sometimes, a loan will end up providing you with a net positive in savings compared to a lease and sometimes a net negative. Most times a loan costs less in the long-term, but you’ll pay a little more the first few years. When the loan goes away, the savings are much higher than a lease.
Here’s a general rule of thumb: If you are over 40, and can afford a little higher payment, then a loan is the way to go. This is because you will realize the savings and then have nearly zero energy costs over time. That’s never the case with a lease. You will always have a lease payment.
If you are retired and going to pass your estate on to your family, a lease might be the way to go. It essentially freezes your energy costs at today’s rate for 20 years. You’ll pay a little more in the long run because it’s longer than a loan, but your monthly payments will typically be lower than a loan payment.