Solar Leases vs. Solar Loans. What’s the Difference?

You have your sights on solar? First of all, that’s a bright idea! 

Buying your solar system gives you the most bang for your buck. But, if you don’t have the cash to purchase, you’ll have to decide how to finance it. Should you lease or buy with a loan? Both offer their own set of advantages and considerations. 

Here are some pros and cons to loans, leases, and PPAs (Power Purchase Agreements), according to your friendly solar experts at A.M. Sun Solar.

Solar Loan Pros

A solar loan is a financing option that allows homeowners to purchase a solar system by borrowing money from a financial institution. With a loan, you can have a solar system with no money down and see savings in your monthly electricity bill. The monthly savings from a solar loan is usually higher than with a lease or PPA.

  • Ownership: By opting for a solar loan, you will own the solar panels and the energy they produce. Only when you own a solar energy system do you benefit from incentives such as tax credits and rebates. Click here to find out how the solar tax credit works.
  • Long-term Savings: While upfront costs may be higher, the savings from reduced energy bills can outweigh loan payments, leading to significant long-term financial benefits. Solar loans are usually paid down in 5 to 15 years. Once it’s paid off, the solar panels provide you with free electricity!
  • Increased Home Value: Installing a solar system will likely increase the value of your property. Homes with solar panels usually sell faster and for more than similar homes without solar.

Solar Loan Cons 

  • You must meet several qualifications to be approved for a loan.
  • A solar loan has interest payments that build up over time.

Solar Lease Pros 

Solar leases and PPAs are similar to car leases. The homeowner doesn’t own the solar system, but rather makes monthly payments to a third party. But, you are able to switch to solar without the hefty upfront investment. With a lease or PPA, you are typically locked in to monthly payments for the life of the agreement—20 to 25 years.

  • Costs: You can often get your solar panels up and running with little to no money down.
  • Energy: The homeowner uses the energy the solar panels generate to power their home.
  • Electric Bills: Electricity will likely cost less than what you’d typically pay a utility company.
  • Maintenance: Since the leasing company owns the solar system, they usually cover any maintenance costs during the term of the lease.

Solar Lease Cons

  • Most solar leases and PPAs increase at a predetermined rate each year, while solar loans have fixed payments.
  • You won’t benefit from government solar tax credits or rebates; the owner is the one who benefits.
  • If you sell your house, the new homebuyer would assume the terms of the lease until you purchase the panels or move them to your new house, which come at an expense.
  • Tap here to find out more about PPAs and why you could end up spending more.

In the long-run, purchasing a solar system makes the most financial sense. Find out how paying cash can create big savings

But, whether you buy with cash or a loan or sign a lease, you’ll enjoy energy savings with solar. It’s a good investment, and you’re helping our planet.

When you’re ready to make the switch to solar or if you’re thinking about adding panels or storage, A.M. Sun Solar offers free consultations! We are no-pressure, local people with outstanding customer service. We will come out and explain all of this to you in relation to your unique needs, for free!

Our team is waiting to talk to you about the best energy solution for your needs. Fill out the form below to schedule your FREE solar consultation!

More About A.M. Sun Solar

A.M. Sun Solar is the local leader in custom solar solutions and installations on the Central Coast. For over two decades, A.M. Sun Solar has provided high quality, cost efficient solar energy to residences and small businesses in San Luis Obispo, Monterey, and Santa Barbara counties. With a wide variety of financing solutions available, affordable pricing, custom solutions and complete installations from permit to interconnection, A.M. Sun Solar is the go-to local solar company on the Central Coast.

Connect with us today at, (805) 772-6786, or fill out the form below to get a FREE on-site consultation with one of our friendly solar experts.