Two common financing choices for homes wishing to transition to solar power are solar loans and solar leases. You can use any of them to install solar panels without being concerned about the high initial expenses. In reality, both solar loans and leasing frequently demand no down payment. Let’s find out which one is better for you!
Solar Lease
Like a car lease, a solar lease has some similarities. The Solar Panels are leased from a solar contractor on a monthly basis; the homeowner does not own the solar panels. The homeowner receives the right to use the energy that the solar panels generate to power their home in exchange for the lease payments. They normally have lease lengths of 20 to 25 years, and the monthly leasing cost will likely be lower than the homeowner’s previous electric bill.
Solar Loan
A solar loan is a loan obtained for the purpose of buying and installing solar panels. Zero-down solar loans are often available from loan providers with a wide range of payment plans, interest rates, and term lengths. The monthly loan payments will typically be lower than your previous power bill payment before your solar installation. The advantage of Solar Loans is that homeowners retain ownership of the solar panels on their roof when the loan is repaid.
Solar Lease vs. Solar Loan
Long Term Savings
Homeowners will save more money on utility bills with a solar loan than they would with a solar lease. On the other hand, if you lease something, your monthly payments are fixed for the whole 20 or 25-year term of the contract. When your lease expires, you no longer save money on your utility bills because the rent you pay does not go toward buying the system.
Recurring Payments
Solar loan payments are typically set, so they won’t change throughout the course of the loan. Contrarily, solar leases frequently have price escalators, which means that your monthly payments will cost more each year.
Tax Rebates
Other solar rebates and incentives, such as Solar Renewable Energy Credits (SRECs), the federal investment tax credit (ITC), and other utility incentives, are not available if you sign a Solar Lease. Since they are the system owners, the solar leasing firm instead benefits from all of those advantages. You can earn the federal tax credit, SRECs, and any regional and local utility incentives if you choose to finance your solar system using a solar loan.
Maintenance
Since you don’t own the panels when you sign a solar lease, you are not accountable for performing any maintenance or keeping an eye on the solar system. In the event that something goes wrong, the solar provider will be responsible for paying for any necessary repairs. Whereas, the case is opposite while availing solar loan as you are the owner.
Selling out your Home
Either the lease must be bought out by the homeowner, which can be costly, or the lease must be transferred to the new homeowner. Finding homeowners willing to sign a solar lease agreement can be challenging. Prospective home buyers won’t have to worry about signing a lengthy lease agreement because homeowners with solar loans own the system, and they get to use the Solar Panel System.
Conclusion
Most of the time, taking out a solar loan is preferable to signing a solar lease. The homeowner will see significantly higher savings throughout the course of the solar system. Additionally, with a solar lease, homeowners can benefit from solar subsidies for which they would not otherwise be eligible. On the other hand, solar lease could be beneficial for you if you are not eligible for FST, SRECs and solar loan.
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Investing in the Solar Panel System has always created a war between Solar Loans and Solar Lease. Let’s find out in this blog post which one is better for you!