The Difference Between Leasing and Buying A Solar Electric System
Filed under: Solar Installation
If you are considering a solar power installation for your home, then you need to consider the way that you will pay for that system. Different solar installation companies offer various options for the upfront costs. It is important that you understand your options so that you can choose the financial plan that will work best for you and your family.
Paying for a Solar Installation
There are three main choices that you can consider when choosing a payment option for solar installation:
- Cash Payment: If you have the cash on hand, then you can pay for the solar power system up front. This option allows you to avoid the interest costs of financing the system. This is the least expensive way to purchase a solar system. If you install a system that will cover your historical electric usage and you continue to use the same amount of electricity each month in your home, you won’t have a monthly payment for electricity.
- Financing: There are often options to finance the solar electric system. In this situation, the funding usually comes from a 0-down loan, that is normally for 12 years, with no pre-payment penalty. You make monthly payments to a credit union or loan company and pay off the balance over time. When you pay cash or finance your system, there is a 30% Federal Tax credit that is available.
- Leasing: This option doesn’t require that you have cash or financing to pay for the solar power equipment. Instead, you will need to pay a monthly lease fee for the use of the equipment. The leasing company takes the Federal Tax Credit, instead of the customer, when the system is leased. Most leases are for 20 years or payments.
Each situation is unique, which is why your best option is to talk to an experienced installation team for recommendations. We can evaluate your home and help you identify the solutions that will work best for your family.
Why Leasing May Not Be the Best Option
Leasing might seem like a simple solution if you don’t want to bear the financial burden of paying for the system with financing. But, you need to consider one important difference between leasing and financing: when will the payments end?
If you are leasing the solar system, then it means that you will have a monthly payment for 20 years, instead of 12. On the other hand, when you finance your solar system, your payments will stop once the loan has been paid in full. The solar panels have a 25 year manufacturer’s warranty, so once you pay off your 12 year solar loan, you will have free electricity for at least the next 13 years. Normally, there is a lien put on your house with a lease and if you sell your house, the buyer will have to qualify for the lease.
It is nice to get to the point where you no longer need to make monthly payments on your solar power system. So, we encourage customers to choose a financing option instead of paying to rent the equipment for 20 years. If you would like to learn more the options available for solar systems, you can speak to us at New Day Solar. We will always give you honest answers to your solar questions and we would be happy to go over options with you. Please call us at: (855) 444-6329 or you can visit us online at: www.newdayolar.com.
