Why Loans Make More Sense Than Leases or PPAs
Leasing solar panels for your home is not a good idea from a financial perspective. We just don't recommend it. In most cases, you will save much more money in the long run by exploring other financing options, such as an FHA Title 1 loan or a traditional loan from your personal bank to get solar panels installation .
The chart below shows the average return on investment when you buy, finance, or lease your system. The difference between getting a loan and buying a system with cash is quite small, compared to far lagging leases and PPAs (Power Purchase Agreements). Consult an Electrical contractor services in Miami and Broward Counties
We do not recommend solar leasing because:
- You do not own your system. It is owned by a third-party company and can be repossessed if you miss payments.
- You do not get to claim tax incentives, including the 26% federal solar tax credit for Solar panels installation. Those belong to the leasing company.
- You’ll get a much lower return on investment than you would if you chose to finance your system with a loan.
To expand on those points:
A solar lease is just one more financial “tool” that is complex enough that you can’t quite see what the real cost of it is.
A lease contract is not easily transferable if you decide to sell the house. According to one large solar leasing company: “If you sell your home before the end of the lease, you can transfer the lease to the new owners if they qualify with excellent credit, or you can prepay the lease and add it to your home asking price.”Qualifying” means a 700 or higher FICO score.
It may make selling your home more difficult.
The Washington Post article “Why leasing solar panels may not be a good idea if you’re planning a home sale” (Nov. 17, 2015) says that potential buyers may be frightened by an existing solar lease on a home. They have to meet onerous credit requirements and make payments on the remainder of the lease term, often 10-20 years.
In contrast to owned panels that increase the value of a home, leased panels can scare off buyers or force you to buy out a lease in order to complete the home sale.
If it looks too good to be true, then you haven’t read the fine print.
Lease payments are set to increase on an annual basis. An annual lease payment increase of 3.9% per year for 15 years is typical. If your electric bill does not exceed $110, this program makes absolutely no sense financially. If you do not already have good credit, you’ll pay more than the advertised price.
You never own the solar panels.
In fact you will have to either return them after 15 years or purchase them from the solar company at the end of the lease.