Solar Leases vs. Solar Loans—Which Is Right for Me?

May. 05, 2021

If you’re looking to take advantage of the benefits of solar energy but can’t make the upfront investment, solar leases and solar loans are two options many Massachusetts homeowners may consider. While at Boston Solar, we can help explain the difference between a solar lease and a solar loan, and how to know which is right for you. We can also provide recommendations on which solar loans to consider. Here’s everything you need to know about solar leases and solar loans in Massachusetts, from the #1 MA-based solar installer, Boston Solar.  


How Does a Solar Lease Work? 

When you lease residential solar panels, you are renting the equipment from the company that owns them, such as the installer or lease provider. The solar panels are installed on your property and used to power your home, but you don’t actually own them. Solar leases are usually approved quickly, often in one meeting, though at Boston Solar we don’t provide home solar leases.  


How Much Does a Solar Lease Cost? 

You can sign a solar lease for $0 down, and you will then owe a monthly payment to your lease provider, usually for a 20- to 25-year term. Your monthly payment will likely be less than what you’re currently paying monthly for electricity, leading to immediate savings. However, solar leases do not have fixed rates and typically increase annually.


Do Solar Leases Qualify for Solar Incentives? 

The main drawback of a solar lease is that you are not eligible for incentives like the federal or state solar tax credit or monthly SMART payments when you lease solar panels—the lease provider is. This means you won’t be able to save on installation costs with a tax credit or make money off your solar panels through SMART and other incentive programs, as you can when you buy or finance solar panels. 


Does a Solar Lease Affect Home Value? 

Solar panels can attract buyers and increase the value of your home whether they’re leased or owned. But if you lease solar panels and then sell your home before the end of the lease term, you will either need to buy out the lease from the provider or transfer it to the new homeowner. 


Solar Financing and Loans 

Most homeowners who do not buy their solar panels outright choose a solar energy loan rather than a lease. When you take out a solar panel loan, you are borrowing money from a lender to pay for your solar panel installation.

With a solar loan, your home solar system will cost much less upfront than it would if you were to buy the system outright, and you, not the solar financing company, will be the owner of the system. However, securing a solar loan may take longer than obtaining a lease due to additional steps like property appraisals and title searches. 


How Much Does It Cost to Finance Solar Panels? 

Most solar loans have a fixed monthly investment payment and you may find they offer a $0 down payment. Solar loan rates and terms vary and the best solar loan for you will depend on your specific needs, preferences, and financial situation.  


Are You Eligible for Solar Incentives When You Finance Solar Panels? 

When you finance your solar panels with a solar loan, you are the owner of the system. This means that you can apply for solar incentives like the federal solar tax credit to save on installation costs, and you can also earn money for the energy your solar panels produce through SMART, net metering, and other solar incentives. Thanks to these incentives, you can pay zero dollars down and be cash positive when you take out a loan for solar panel installation. 


Does Financing Solar Panels Affect Home Value? 

Your options for selling your home before you’ve paid off your solar panel loan will depend on the type of loan you take out. However, homes with solar panels tend to sell for more than homes without them, which means you could make back more than what you owe on the loan when selling your home.  


Need Help Deciding Between Financing vs. Leasing vs. Buying Solar Panels? 

Here at Boston Solar, we’re committed to making the solar installation process as seamless as possible for our customers. More than 4,500 homeowners and businesses have trusted us to install their solar panels, and we’re proud to be a reputable company that you can trust to put your needs first. 

We can help you understand your solar loan options, make solar loan recommendations, and navigate the process of applying for a solar loan if you choose to finance your solar panels. Boston Solar will be there to guide you through the process every step of the way. 

Start your solar journey today with a free solar quote. Call 617-858-1645 or contact us here to get your quote. 

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