The four options at a glance
| Option | Upfront cost | Ownership | Federal incentive | Lifetime savings |
|---|---|---|---|---|
| Cash | Full system price | You | None (expired) | Highest |
| Loan | $0 down typical | You | None (expired) | High (minus interest) |
| Lease | $0 down typical | Solar company | Commercial ITC (passed through) | Low |
| PPA | $0 down typical | Solar company | Commercial ITC (passed through) | Low |
Cash: the lifetime winner
Pay full price upfront, own the system outright, save the most over 25 years. Even without the federal credit, cash purchases still deliver the highest lifetime ROI because you avoid loan interest, dealer fees, and lease/PPA escalators. The downside in 2026 is the upfront sticker shock — that $7,000–$10,000 federal credit used to make cash feel a lot easier.
Best for: homeowners with the funds available who plan to stay 8+ years.
Loan: keep ownership, spread the cost
Solar loans typically run 10–25 years at 6.99–9.99% APR (sometimes higher). You own the system, claim any state credits, and benefit from any home value appreciation. Major caveat: most "low APR" loans bake a 20–30% dealer fee into the cash price. Always ask for both the cash price and the financed price.
Watch for re-amortization: many older solar loans were structured to assume you'd pay 30% of principal in month 18 (the federal tax credit refund). With that credit gone, that paydown won't happen, and your monthly payment may jump significantly. Ask explicitly: "Does my payment increase if I don't pay X amount in year 1?"
Best for: homeowners who want ownership without paying cash, with strong credit (700+) for the best rates.
Lease: pay for usage, no ownership
A solar lease is a 20–25 year contract where you pay a fixed monthly amount and the solar company owns the system. Because they own it, they claim the commercial ITC and may pass some savings through to you in the form of lower payments. In 2026, this makes leases more competitive on monthly cash flow than they've been in years.
The catch: most leases include 1.9–3.9% annual escalators. By year 20, your lease payment may exceed what you'd pay the utility. Always demand a 0% escalator. Also, leased solar complicates home sales — buyers must qualify to assume the lease.
Best for: homeowners with no tax liability for state credits, who want $0 down with no payback math, and who are confident they'll stay in the home or that buyers will assume the lease.
PPA: pay per kWh produced
A PPA (power purchase agreement) is similar to a lease, but instead of paying a fixed monthly amount you pay a $/kWh rate for the power the system produces. If production is low, you pay less; if high, you pay more. PPAs typically have the same kind of escalator as leases.
The advantage of a PPA over a lease is that you only pay for energy actually produced — so a cloudy year doesn't penalize you. The disadvantage is the same as a lease: no ownership, escalators, and home-sale complications.
Best for: homeowners who want maximum flexibility and don't want production risk.
2026 monthly cash-flow comparison (8 kW system, $24K cash equivalent)
| Option | Year-1 monthly cost | Year-20 monthly cost | 25-yr total cost |
|---|---|---|---|
| Cash | $0 (paid upfront) | $0 | $24,000 |
| Loan (15-yr, 7.99%) | $229 | $0 (paid off) | ~$41,200 |
| Lease (3% escalator) | $110 | $199 | ~$44,300 |
| Lease (0% escalator) | $135 | $135 | ~$40,500 |
| PPA ($0.13/kWh, 2.9% esc) | ~$130 | ~$229 | ~$48,000 |
Numbers are illustrative and vary by installer, credit, and state. Cash always wins on total cost — the question is whether you have $24K to put up front.
Red flags by financing type
Loans: dealer fees over 20%, APRs over 9.99%, "promotional" rates that reset, re-amortization clauses tied to expired tax credits.
Leases: escalators above 2%, no buyout option, vague pass-through of commercial ITC, "production guarantees" with weather exclusions.
PPAs: rate above $0.14/kWh year 1, escalators above 2%, ambiguous metering provisions.
See predatory solar financing for the full list of warning signs.
What to ask any financing rep
- "What's the cash price vs the financed price?" — reveals dealer fee
- "What's the APR or escalator?" — get it in writing
- "Show me the full amortization or 25-year schedule"
- "What happens if I sell the home?" — critical for leases/PPAs
- "Is the federal commercial ITC reflected in my pricing?" — for leases/PPAs only
- "Can I buy out the lease/PPA after year 6?" — buyout option matters for resale
Let us decode your financing
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Analyze My Financing →Frequently asked questions
Are leases really better in 2026?
Better than they were in 2025, yes — because they kept federal incentive access while cash and loans lost it. But cash is still the lifetime winner if you can afford it.
Should I refinance an old solar loan?
Maybe. If your loan has a re-amortization clause tied to a tax credit you're no longer claiming, refinancing to a fixed payment can avoid payment shock. Run the numbers carefully.
Can I switch from a lease to ownership later?
Most leases include a buyout option after year 5–7. Buyout pricing is typically the fair market value of the system, which can be a few thousand dollars by then.
Do leases hurt home value?
They can. Some buyers refuse homes with leased solar; others won't qualify to assume the lease. Owned solar adds value (~4%); leased solar is neutral to slightly negative.
What's the best loan APR I should expect?
For prime credit (740+), legitimate solar loans run 6.99–8.99% APR with minimal dealer fees. Anything advertised below 5% APR almost certainly has a 25%+ dealer fee baked in.