Cash purchases and loans generally mean you own the solar system. With a lease or power purchase agreement (PPA), another company generally owns it. The right comparison includes your solar payments, remaining utility charges and the terms of the actual agreement, not just the advertised monthly amount.
Cash purchase
You pay the purchase price under your agreement's payment schedule. There is no solar loan payment, but utility charges and applicable maintenance or service costs can remain. Review the installation scope and warranties separately.
Solar loan
A loan finances the purchase. Compare the cash price, financed price, interest rate, fees, term and total payments. Check whether the required payment changes unless you make a specified additional payment. Do not assume a tax credit will be available to fund that payment.
Lease
You pay to use a system owned by the provider. Review the payment schedule, any annual increase, maintenance responsibilities, transfer requirements and end-of-term options.
Power purchase agreement (PPA)
You purchase electricity under a contract with the system owner. Review how charges are calculated, any rate increases, minimum obligations and the terms for selling your home or ending the agreement.
How to compare the financial picture
Compare like-for-like equipment, installation scope and production assumptions.
Include remaining utility bills; solar does not automatically eliminate them.
Use only incentives for which you are eligible.
Check who handles repairs and what the actual warranties cover.
Payback is not the same as return on investment
A simplified cash-purchase payback estimate is net upfront investment divided by estimated annual net savings. For example, a $24,000 investment and $2,400 in annual net savings give a simple 10-year estimate. These are illustrative figures, not an expected result or guarantee.
Net savings should account for the relevant ongoing costs and utility charges. Real results vary with production, usage, tariffs and costs. A simple payback estimate does not model financing, the time value of money or changing savings year by year.
Questions before signing
Ask for the complete payment schedule, total cost, ownership details and applicable agreements. Available products depend on provider eligibility and the offer you receive. For an existing loan or contract, contact the provider shown on your current statement.
Learn more from the Consumer Financial Protection Bureau's solar financing guide and the FTC's solar consumer guide. For the homeowner federal credit cutoff, see our tax-credit guide.