Are you interested in Solar, but you’re stuck between buying and leasing your system? Installing Solar on your home is a big commitment with a lot of moving parts. When it comes to deciding, there are multiple aspects to consider but, the most important thing to remember is to do what’s best for you and your family.
How does Solar Leasing Work?
Solar leasing works by having a third-party solar company own, install, and maintain the system on your property. With this exchange, the homeowner will pay the company a monthly fee for the energy that the solar panels generate.
Solar Leasing can allow homeowners to go solar with as little as $0 down, essentially eliminating upfront installation costs, making solar leasing one of the most popular ways to make the switch to solar. Solar leasing makes solar more attainable for customers who may not have the cash upfront. With the cost of solar falling over time, leasing may not be the most appealing or necessary option.
Although the panels will be installed on the home, the homeowner won’t own them. The leasing company owns the panels, and the homeowner will pay a monthly fee to use them – similar to leasing a car, where you essentially rent the vehicle. In some cases, there might be a buyout option but be sure to read and understand your lease agreement/ buyout options.
Advantages of Solar Leasing
- Low to no upfront costs: Solar leasing often requires you to pay little to no down payment, this makes solar more accessible to those who may not have the money for upfront cost.
- No maintenance responsibility: The leasing company will handle all maintenance and repairs, and the homeowner doesn’t have to worry about the health of the system.
Drawback of Solar LeasingÂ
- Owning vs Renting: The solar system will be owned by the leasing company, not the homeowner. You’re basically renting the system – there’s no equity in it.
- Unpredictable monthly payments: Many solar leases include an escalator, which means your payments may increase over time which can decrease long-term savings.
Monthly Payments for Leasing and Buying Solar
When people decide to buy their solar systems, they’re more than likely to choose to finance the system. At Kokosing Solar, we offer $0 down with a fixed payment and no pre-payment penalty. With this choice, the payment for each month is always the same, making the payments predictable for planning and there are no surprises with different charges.
As for leasing, your monthly payment may look a little different. When you’re under a lease contract, you can start out with a lower monthly payment but as time goes on, there’s a high chance that your lease contains an escalator that will increase your payment by at least 2.9% every year. This escalator can really add up to a point where leasing might not be worth it.
Solar Tax Credit
A perk of buying your solar system rather than leasing is the federal solar tax credit, this tax credit allows you to claim 30% of the total cost of your installation – this significantly reduces the cost of making the switch to renewable energy for your home.
On the other hand, if you lease your solar system, you’re ineligible to claim this tax credit. The 30% savings will go to the owner of the panels, the leasing company.
Making the Right Choice for Your Home and Budget
In conclusion, deciding whether to lease or buy solar panels depends on your financial situation, long-term goals, and your preferences. Leasing may be a good option for homeowners who don’t have the upfront cost but still want the benefits of going solar. However, when you buy your system, you’re looking at better long-term savings and increased ownership benefits, including tax incentives and a higher property value.
Consulting with a
professional solar company, like Kokosing Solar can help you better understand your options and make an informed decision based on your needs.
