Cash, Loan, Lease, or PPA? Choosing the Best Way to Finance Your Solar System

So you’ve decided to go solar—now comes the question every homeowner eventually faces:

“Should I buy my system, finance it, or sign a lease or power purchase agreement?”

Each option can get you panels on your roof and lower utility bills. But the difference in ownership, savings, flexibility, and long-term cost can be massive.

This guide breaks down the four main ways people pay for solar:

1. Cash Purchase

2. Solar Loan

3. Lease (typically structured as a 0% PPA today)

4. Power Purchase Agreement (PPA)

We’ll explain how each works, who it’s best for, and what you need to know before signing anything.

1. Cash Purchase: Full Ownership from Day One

Paying upfront for your solar system is the simplest and most cost-effective option—if you can afford it.

How it Works:

• You pay for the total system cost upfront (often $15,000–$30,000 depending on size and complexity).

• You own the equipment outright.

• You receive 100% of the financial benefits, including:

• Federal tax credit (currently 30% under the Inflation Reduction Act)

• State/local rebates

• Utility incentives

• All future energy savings

Pros:

• Highest long-term savings

• No monthly payments

• Full tax credit eligibility

• Increases your property value without debt

• Easier to sell or refinance home (no contract complications)

• Qualifies for battery and EV charger incentives

Cons:

• High upfront cost

• Payback period is typically 5–8 years

• Ties up cash that could be used elsewhere

Who It’s Best For:

• Homeowners with available funds or home equity

• People who want maximum ROI

• Those who plan to stay in the home long-term

2. Solar Loan: Own the System, Pay Monthly

A solar loan allows you to finance your system over time while still owning it. This option combines the ownership benefits of cash with the payment flexibility of a lease.

How it Works:

• You finance the system through a solar lender, credit union, or bank.

• Loan terms range from 5 to 25 years.

• Rates vary but are often between 3.99% to 7.99% depending on credit, loan type, and fees.

• You still qualify for the full 30% federal tax credit.

Pros:

• Low or zero upfront cost

• You own the system

• Monthly payments offset by energy savings

• Eligible for tax credit and rebates

• Can be paid off early without penalty

Cons:

• Total cost is higher due to interest

• Some lenders charge dealer fees (which can inflate system price)

• Must maintain good credit

• Adds to your debt-to-income ratio for refinancing

Who It’s Best For:

• Homeowners who want to own their system but prefer not to pay upfront

• Buyers looking for monthly cash flow from solar

• Anyone planning to stay in the home for 5–10+ years

3. Power Purchase Agreement (PPA): You Pay for the Power, Not the Panels

A PPA is like renting your solar power. A third-party company installs and owns the system—you pay them per kWh for the electricity it produces, usually at a rate lower than your utility.

How it Works:

• The installer owns, maintains, and monitors the system.

• You agree to purchase all solar electricity it generates for 20–25 years.

• Rates typically start 10–20% below utility prices.

• Escalators (annual price increases) often apply—typically 2–3% per year.

Pros:

• $0 upfront cost

• Immediate energy savings

• No maintenance or repair responsibility

• Flexible payment plans

• Available even with lower credit (often 600+ FICO)

Cons:

• You don’t own the system

• No tax credit or rebates

• Long-term contract (may affect home sale)

• Lower lifetime savings than ownership

• Rate escalators can eat into savings over time

Who It’s Best For:

• Homeowners who want clean energy with no upfront cost

• People who can’t use the tax credit

• Those planning to sell within 5–10 years and want immediate savings

4. Lease (Structured as 0% PPA): Fixed Monthly Payments, No Ownership

Leases are very similar to PPAs, but instead of paying per kWh, you pay a flat monthly fee for the system. Most modern leases are now structured as 0% PPAs, which means you’re essentially paying a set monthly rate regardless of system production.

How it Works:

• The installer owns and operates the system

• You pay a fixed monthly fee for 20–25 years

• No upfront cost

• Often includes a performance guarantee

Pros:

• Predictable monthly payments

• $0 upfront

• Maintenance and service included

• Easier budgeting than PPA with variable usage

• Available to those without tax credit eligibility

Cons:

• No tax credit or incentives

• Less savings than ownership

• Transfer required if you sell your home

• Escalators may still apply after fixed term

Who It’s Best For:

• Homeowners who don’t want to deal with system ownership

• Those who value predictability over maximum savings

• Families on a fixed income who want a fixed energy bill

Financial Comparison Snapshot (20-Year View)

Option

Ownership

Tax Credit

Monthly Cost

Long-Term Savings

Maintenance

Cash

Yes

Yes

$0

Highest

You

Loan

Yes

Yes

Low–Med

High

You

PPA

No

No

Variable

Med–Low

Provider

Lease

No

No

Fixed

Med

Provider

Why Homeowners Choose One Over the Other

Choose Cash if:

• You want to maximize ROI and energy independence

• You can afford the upfront cost

• You plan to stay in your home long-term

Choose Loan if:

• You want ownership and tax credits

• You prefer to spread out payments

• You want flexibility to refinance or pay off early

Choose PPA if:

• You want solar with no responsibility

• You want immediate savings with no upfront cost

• You’re not eligible for the tax credit

Choose Lease if:

• You want a predictable monthly bill

• You don’t want to worry about system maintenance

• You prefer a fixed-rate agreement

Final Thoughts: The Best Financing Option Is the One That Matches Your Life

There’s no one-size-fits-all answer to solar financing. It comes down to your goals, your cash flow, and how long you plan to stay in your home. A cash or loan purchase typically offers the best long-term return, but leases and PPAs can still be smart for people who prioritize simplicity or short-term cash flow.

Our job is to help you understand the tradeoffs and build a solar solution that fits your life—not just your roof.

Still Not Sure What’s Right for You?

Let us run the numbers with you. We’ll break down real proposals based on your utility bill, usage habits, and credit profile.

Visit www.reinnovations.org to schedule a no-pressure consultation.

We’ll help you go solar smarter—whichever path you choose.