There are many different options on how you can finance the installation of a solar panel system for your home. The choice you make will have impacts on various incentives so it is important to make an informed decision.

I will cover the following financing options:

Finance Option Pay Back Own Install Cost
Cash Purchase Years Yes High
Solar Loan Years Yes Low
Solar Lease Months No None
Solar Rent Immediate No None
Community Solar Years Yes High

Cash Purchase


Cash purchase and solar loan options you are the owner of the system and you receive all the federal, state and local tax breaks and incentives. You also get the benefit of increased resale value.


The initial cost of the solar panels can be expensive and tax breaks are not realized until you file your tax return or you reduce payroll withholding. You are essentially paying for some or all of your electricity for the next 10+ years all at once.

Solar Loan

A loan to purchase a residential solar system covers many different options. There may be federal or state incentive loans for solar, you may have the loan through your solar system vendor or take out a home equity loan.


Solar loan has the same characteristics of a cash purchase of solar system in regards to ownership and resale value. The additional benefit of a solar loan is that your initial costs are low so your payback is much quicker. You might find your electricity savings cover most or your monthly loan payment.


Taking a loan does require you to pay interest on the loan. Additionally you will need to satisfy the loan if you sell the home.

Solar Lease

If you think of a solar lease like a car lease then you are not the owner of the solar system. Solar Lease programs vary.


Like a car lease, you typically have little up front cost and you are only making payments on the portion of the solar system you use thus making your monthly payments a little lower than a solar loan.

Another advantage of leases in general is that you are not locked into today’s current technology. Conceivably you can upgrade your system when a new model comes out. Once again, check the solar lease programs for more details.


The downside to most leases is that you don’t own so you don’t qualify for any incentives and if you sell your home the buyers would have to assume the lease or you might have to break the lease.

Solar Rent

There is at least one company that will rent a solar system to you at this time. We will cover this option in more detail in a future post.


Rent typically is the lowest cost to start, has a shorter commitment period and payback can be pretty quick.


Like Solar Lease, you do not own the system and can not claim incentives. Rent is normally a higher monthly payment than a solar loan or solar lease.

Community or Shared Solar

There are situations and programs where individuals are not able to install a solar system but collectively they can. An example is property that does not have the exposure or space to install solar but there is availability nearby that can accommodate multiple families.

This makes solar power available to residents who normally would not be a candidate for solar.