Lease vs Buy Solar Panels 2024: Which Option Saves You More Money?

The short answer: Buying solar panels saves more money long-term ($15,000-25,000 over 25 years), while leasing offers immediate savings with $0 down but lower lifetime returns.

Quick Decision Framework:

• Buy if: You qualify for tax credits, plan to stay 10+ years, have good credit/cash
• Lease if: You want immediate savings, poor credit, or uncertain about long-term residence

Pro Tip: The average homeowner saves 68% more by purchasing solar panels versus leasing over a 25-year period, even when factoring in maintenance costs.

As someone who’s analyzed thousands of solar installations and financing scenarios, I’ll break down the real numbers behind both options so you can make an informed decision that maximizes your savings.

Solar Panel Ownership vs Leasing: The Financial Reality

The solar industry has evolved dramatically, with 86% of residential installations now using some form of financing. Understanding the true cost difference between leasing and buying requires looking beyond monthly payments to total lifetime value.

Key Financial Differences:

• Ownership: Higher upfront investment, maximum long-term savings
• Leasing: Lower barrier to entry, steady but limited savings
• Tax implications: Buyers get federal credits, lessees don’t
• Property value: Owned systems add 4.1% home value, leased systems may complicate sales

The decision ultimately comes down to your financial situation, timeline, and risk tolerance. Let’s dive into the specific numbers.

Solar Panel Purchase vs Lease Costs: Complete Breakdown

Here’s what you’ll actually pay with each option, based on a typical 6kW system producing 8,500 kWh annually:

Cost Factor	Solar Purchase	Solar Lease	Difference
System Cost	$18,000	$0 down	$18,000
Federal Tax Credit	-$5,400 (30%)	$0	-$5,400
Net Initial Cost	$12,600	$0	$12,600
Monthly Payment	$0 (after payoff)	$89-129	Varies
20-Year Total Cost	$12,600 + maintenance	$28,800	+$16,200
Electricity Savings	$34,000	$21,600	+$12,400
Net 20-Year Savings	$21,400	$21,600	Similar short-term
25-Year Net Savings	$38,900	$15,600	+$23,300

Additional Purchase Costs to Consider:

• Maintenance: $300-500 annually after warranty
• Inverter replacement: $1,200-2,000 (years 10-15)
• Insurance increase: $50-100 annually

Hidden Lease Costs:

• Escalation clause: 2-4% annual payment increases
• Early termination: $5,000-15,000 penalty
• Roof repairs: Must remove panels at your expense ($2,000-4,000)

How Solar Financing Works: Your Step-by-Step Options

Purchasing Solar Panels

1. Cash Purchase (Best ROI)

• Pay full system cost upfront
• Claim 30% federal tax credit
• Payback period: 6-8 years
• 25-year savings: $35,000-45,000

2. Solar Loan Financing

• 0% down options available
• Terms: 10-25 years at 2.99-7.99% APR
• Keep ownership benefits and tax credits
• Monthly payments similar to lease initially

3. HELOC/Home Equity Loan

• Often lowest interest rates (3-5% APR)
• Tax-deductible interest (consult tax advisor)
• Requires home equity and good credit

Solar Leasing Process

1. Application and Approval

• Credit check (minimum 650 score typically)
• Home assessment and energy usage review
• Contract terms: usually 20-25 years

2. Installation

• Leasing company handles permits, installation
• No upfront costs for standard installations
• System monitoring included

3. Monthly Payments Begin

• Fixed monthly fee regardless of production
• Escalation clauses increase payments annually
• Maintenance included in lease terms

Signs You Should Buy (vs Lease) Solar Panels

Choose Purchasing If:

• You qualify for tax credits - The 30% federal credit alone saves thousands • Credit score above 650 - Access to competitive loan rates • Planning to stay 8+ years - Time to realize full investment benefits • Available cash or equity - Even financed purchases often beat leasing • Want maximum savings - Ownership provides 2-3x higher lifetime returns • Property value matters - Owned systems add $15,000-20,000 home value • Energy independence goal - Own your power production completely

Choose Leasing If:

• Credit score below 620 - Limited financing options make leasing attractive • Uncertain residency - Moving within 5-7 years favors flexibility • No tax liability - Can’t utilize federal/state tax credits • Maintenance concerns - Want worry-free system operation • Immediate cash flow - Need instant bill reduction without investment • Complex roof issues - Leasing company handles complications

Solar Panel Financing Options: Complete Comparison

Financing Method	Down Payment	Interest Rate	Tax Credits	Total Savings (25yr)	Best For
Cash Purchase	100%	0%	Full 30%	$35,000-45,000	Maximum ROI
Solar Loan	0-20%	2.99-7.99%	Full 30%	$25,000-35,000	Most flexible
HELOC	0-10%	3-5%	Full 30%	$30,000-40,000	Lowest rates
Solar Lease	$0	N/A	None	$15,000-25,000	Immediate savings
Power Purchase Agreement	$0	N/A	None	$12,000-20,000	Performance-based

Loan vs Lease Monthly Comparison:

• Solar loan payment: $95-140/month (disappears after 10-15 years)
• Solar lease payment: $89-129/month (continues for 20-25 years + escalations)
• Break-even point: Month 180-200 when loan benefits overtake lease

Expert Money-Saving Tips: Maximizing Your Solar Investment

Pro Tip #1: If you’re considering leasing for the $0 down benefit, explore $0 down solar loans instead. You’ll get similar monthly payments initially but own the system and qualify for tax credits.

Advanced Purchase Strategies:

1. Time Your Purchase for Maximum Credits

• Install before December 31st to claim current year’s tax credits
• Stack federal (30%) with state/local incentives
• Some states offer additional $1,000-5,000 rebates

2. Optimize System Sizing

• Size for 90-100% of usage (not more) to maximize economics
• Avoid oversizing - excess production has diminishing returns
• Consider future electric vehicle charging needs

3. Shop Multiple Financing Options

• Solar loans vs HELOC vs personal loans
• Compare total cost over full loan term
• Factor in tax deductibility of interest where applicable

Lease Optimization Tactics:

1. Negotiate Lease Terms

• Request lower escalation rates (under 2% annually)
• Negotiate early buyout options
• Understand transfer procedures if selling home

2. Performance Guarantees

• Ensure minimum production guarantees in contract
• Understand what happens if system underperforms
• Get monitoring access to track production

Pro Tip #2: If leasing, calculate the total cost including escalations. A $99/month lease with 2.9% annual increases costs $31,847 over 20 years versus the advertised $23,760.

Hidden Cost Avoiders:

For Buyers:

• Budget for inverter replacement (years 10-15)
• Factor maintenance costs ($200-400 annually after warranty)
• Consider extended warranties for peace of mind

For Lessees:

• Understand roof repair responsibilities
• Know early termination penalties
• Clarify insurance requirements and coverage

Frequently Asked Questions

Q: Can I buy out my solar lease early? A: Most leases allow buyouts, but costs are typically $10,000-20,000 above fair market value. The buyout amount decreases over time but rarely becomes financially attractive until years 15-20.

Q: What happens to leased panels when I sell my home? A: You have three options: 1) Transfer lease to buyer (requires credit approval), 2) Pay early termination fee ($5,000-15,000), or 3) Buy out the system. 78% of leases transfer successfully, but it can complicate the sale process.

Q: Do owned solar panels require a lot of maintenance? A: Modern solar panels are very low-maintenance. Expect $200-400 annually for cleaning, monitoring, and minor repairs. Major maintenance (inverter replacement) occurs every 10-15 years at $1,200-2,000.

Q: How do solar loans compare to leases for people with average credit? A: With a 650+ credit score, solar loans typically offer better long-term value. A $18,000 system financed at 5.99% over 15 years costs about $154/month but saves $18,000-25,000 more than leasing over 25 years.

Q: Can I get solar panels with absolutely no money down? A: Yes, both leasing and many solar loans offer $0 down options. However, $0-down loans often have slightly higher rates (6-8% vs 3-5%) but still provide better long-term returns than leasing.

Q: What’s the difference between a solar lease and Power Purchase Agreement (PPA)? A: Leases charge a fixed monthly fee regardless of production, while PPAs charge per kilowatt-hour produced (typically $0.10-0.15/kWh). PPAs can vary monthly but often provide slightly better savings than traditional leases.

Q: Will solar panels work during power outages? A: Standard grid-tied systems (both owned and leased) shut off during outages for safety. To maintain power during outages, you need battery backup (adds $10,000-15,000) or specific “power-outage” inverters.

Final Thoughts: Making the Right Solar Decision for Your Wallet

The math is clear: purchasing solar panels saves significantly more money long-term than leasing. Over 25 years, the average homeowner saves $23,000-30,000 more by buying versus leasing, even accounting for maintenance and financing costs.

However, leasing makes sense if:

• You need immediate bill reduction without investment
• Your credit limits financing options
• You’re unsure about long-term residence
• You prefer worry-free maintenance

The middle ground: Consider $0-down solar loans that provide lease-like accessibility with ownership benefits. Many homeowners find this option provides the best of both worlds.

Next Steps:

Ready to explore your solar options? Our network of certified installers can provide detailed quotes for both purchase and lease scenarios. Get personalized calculations based on your specific roof, energy usage, and financial situation.

Get free solar quotes from top-rated installers in your area and see exactly how much you could save with each financing option.

For more comprehensive information about solar installation, costs, and the complete process, check out our complete guide to home solar panels. You can also explore detailed solar panel costs and learn about the solar installation process to make the most informed decision for your home.