916-507-0551 Click NOW to schedule your FREE in home solar planning session
Buy or Lease Solar Panels
Solar Purchase, Finance or Lease Is buying or leasing solar panels right for you? Residential and commercial solar power is booming in popularity. As many begin to see the environmental, economic and societal benefits of making the switch to a renewable energy resource, it seems like a new installation is popping up every single day. Once someone makes the decision to acquire a solar system for their home or business, the next step is to decide how it's going to get paid for. There are three main payment options associated with solar which include purchasing outright, financing, and leasing. Each of these options have their own set of positives and drawbacks. So, let's dive a bit deeper into all three options to see which may be the best choice for your specific situation, we are here to help change the landscape in the move towards a solar Sacramento.
The Benefits Of Purchasing Perhaps the biggest benefit of purchasing your solar system outright is that you will not have to pay any monthly fees and you will not be subject to paying interest on a loan taken out to pay for the solar system. If you can afford the upfront cost with cash on hand, you will have the biggest possible return on your investment. Additionally, you will be able to fully take advantage of the 30% investment tax credit (ITC) on the following years taxes. The ITC is a dollar for dollar tax deduction equal to 30% of the total installed cost of a solar system. For example, if your solar system cost $10,000, you would pay $3,000 less in taxes the following year. This means your total out of pocket cost would be reduced to just $7,000.
The Benefits Of Financing The best part of financing a solar system for your home or business is that it can be done with little to no money down. This allows you to get all of the benefits of solar, such as reduced energy bills and pulling less demand from the grid each month. Additionally, if you have great credit, your interest rate on the solar loan will be minimal. This means that your total out of pocket cost will only be slightly less than the sticker price after the loan term is up, and you will still get the federal tax credit.
The Benefits Of Leasing Although in a lease you will not own the system, you are still able to get the benefits of solar in the form of lower energy bills. An added benefit of a solar lease is that you are not responsible for maintenance if needed. Instead, the true owner of the solar system who installed it on your rooftop will be in charge of regular maintenance and monitoring to ensure that it is operating properly. Finally, in a favorable lease term, you will be provided with Energy Output Guarantee (EOG) to ensure that you'll see a financial benefit to adding a solar system to your home or business. The EOG will ensure you have a fixed payment for the life of your lease term. Typical leases are for 20-25 years and will offer a fixed payment that is significantly lower than your current energy bills.
The Negatives Of Purchasing
Although you get the financial benefits of purchasing your solar system outright, there are also some downfalls. When you by a solar system, you are now responsible for taking care of every aspect of it. This means either maintaining it yourself or paying someone to do it on a regular basis. You can think of this like how you must pay a mechanic to fix a car you own when something breaks and pay to have it maintained on a regular basis.
The Negatives Of Financing
The biggest downfall of financing comes for those who may not have the best credit. Bad credit usually leads to much higher interest rates on loans and solar is no different. If you interest rate gets too high, you will end up paying far more than the sticker price for a solar system. Additionally, recurring monthly payments mean that you will have less disposable income to spend on more enjoyable things like dinners out with the family.
The Negatives Of Leasing
The biggest drawback to leasing a solar system is that it forfeits your right to any of the financial incentives. This includes the 30% Federal ITC program and any other state programs that may be offered in your area. Additionally, any value obtained from environmental attributes such as Solar Renewable Energy Credits (SREC's) go to the owner and not the person leasing the system.
Every situation is different. By being informed about the pros and cons of all three ways to acquire a solar system for your home or business, you can make a more well informed decision.
Call now to schedule your energy planning session. Produce energy, save money.