Rooftop solar pitches often mix three different products: a cash purchase, a solar loan (you own the system), and a lease or power-purchase agreement (PPA) (a company owns the panels; you buy the power or pay a monthly lease). Sales decks blur those lines. Your job is to separate ownership, APR, term, and what happens when you sell the house.
Treat solar like any other big home project: same four numbers as Comparing financing offers, plus buy-vs-lease specifics. Whole-home generator financing and EV charger / panel financing use the same cash-vs-dealer-fee discipline. Broader remodel context: Paying for home improvements and the home improvement vertical.
Product types in plain language
| Product | Who owns panels | What you pay | Common watch-outs |
|---|---|---|---|
| Cash / HELOC / home equity loan | You | Upfront or secured loan payments | Lien risk on HELOC/HEL (Home equity loan vs HELOC) |
| Solar loan (unsecured or UCC/fixture filings vary) | You (usually) | Monthly loan payment; APR + fees | Dealer fees baked into amount financed; prepayment penalties |
| Lease | Solar company | Fixed or escalating lease payment | Transfer rules on sale; performance guarantees |
| PPA | Solar company | Per-kWh rate (sometimes with escalator) | Rate vs utility; contract length (often 20-25 years) |
Ask in writing: “Is this a loan, a lease, or a PPA?” If the salesperson cannot answer cleanly, pause. Ownership, incentives, and exit costs in depth: Solar lease vs loan.
The numbers to write down
- System cash price (and whether a “financed price” is higher)
- Amount financed, APR, term, monthly payment, total of payments (APR vs interest rate)
- Dealer / origination / documentation fees (sometimes rolled into principal)
- Incentives you actually qualify for (federal tax credit rules change; confirm current IRS / Energy Star guidance - do not take a door-knocker’s tax advice as filing gospel)
- Lease/PPA escalator, transfer fee, and buyout formula
- Production estimate (kWh/year) and what happens if production misses
Same-day “promo APR” that disappears unless you sign before dinner is a pressure cue, not underwriting.
Worked example: loan vs lease sketch
Priya gets three quotes for a similar ~6 kW rooftop system in a state with net metering (rules vary by utility - verify locally).
| Option | Sticker | Structure | Monthly | 20-year sketch |
|---|---|---|---|---|
| Cash | $18,000 after quoted incentives timing | Own | $0 loan | Own system; maintenance responsibility |
| Solar loan | $20,400 financed (includes $2,400 dealer fee) | 9.99% APR, 20 years | ~$193 | Owns system; total payments much higher than $18k cash |
| Lease | n/a | 25-year lease, 2.9% annual escalator | $115 year 1 → rising | Does not own; transfer on home sale needs lessor approval |
Priya’s utility bill averages $140/month. The lease payment starts below that bill, which feels like “savings,” but escalators and non-ownership matter when she sells in year 8. The loan’s $2,400 dealer fee is a real price increase versus cash - exactly the markup pattern common in contractor financing.
Run your utility rate, shade report, and roof age before trusting a salesperson’s “pay for itself in 6 years” slide.
Buy vs lease: decision cues
Buying (cash or loan) often fits when: you will stay put many years, you can use applicable tax credits yourself, and you want the system to add value you control at sale.
Lease/PPA often appears attractive when: upfront cash is zero and the monthly is low - but read assignment clauses, production guarantees, and roof-repair responsibilities. Buyers’ agents sometimes flag hard-to-transfer solar contracts.
Questions to demand in writing
- Cash price vs financed price for the same equipment
- APR, term, total of payments, and any prepayment penalty
- Whether a UCC filing or fixture claim attaches to the home
- Who pays for inverter replacement in year 12
- Exact lease escalator and buyout schedule
- What happens to the contract if you sell or refinance the mortgage
Checklist
- Label the offer: loan, lease, or PPA.
- Get cash and financed prices for identical equipment.
- Compute total loan cost, not only monthly payment.
- Read transfer / sale clauses before you sign a lease or PPA.
- Soft-compare a credit-union home-improvement or HELOC quote if you will own the system.
- Sleep on non-emergency installs; roof leaks and structural work come first.
Educational only. Not an offer of credit, tax advice, or a recommendation of any installer or lender. Solar incentives, net metering, and contracts vary by state and utility. Read every page before you sign.