A solar loan usually means you own the panels and owe a lender. A lease or power-purchase agreement (PPA) usually means a solar company owns the system while you pay a monthly lease or a per-kWh rate. Sales decks blur those lines. Your job is to separate ownership, who claims incentives, and what happens when you sell the house.
For APR/term/dealer-fee math across quotes, use How to compare solar financing offers. Same four numbers as any big ticket: Comparing financing offers. Project context: Paying for home improvements and the home improvement vertical.
Side-by-side
| Solar loan | Lease / PPA | |
|---|---|---|
| Who owns panels | Typically you | Typically the solar company |
| Monthly payment | Loan payment (APR + fees) | Lease payment or $/kWh (often with escalator) |
| Tax credit / incentives | Often claimable by the owner (confirm current IRS rules with a tax pro) | Usually claimed by the company; your “savings” may already net that out |
| Home sale | You sell owned equipment (or pay off loan); disclose as needed | Transfer, buyout, or refinancing rules in the contract |
| Maintenance / performance | Often your warranty stack | Often company responsibility—read the SLA |
| Early exit | Payoff quote; watch prepayment penalties | Buyout formula, transfer fees, remaining term |
Ask in writing: “Loan, lease, or PPA?” If the tablet answer is “energy agreement,” pause until you see the contract type.
Ownership and incentives
Federal residential clean-energy credits and state/utility rebates change. Door-knockers are not your CPA. As owner under a loan or cash purchase, you may be the party who can claim eligible credits—if you qualify and file correctly. Under a lease/PPA, the company commonly keeps the credit and prices that into the offer.
Write down:
- Cash system price vs financed price (dealer fees often inflate principal)
- Who files for which incentive
- Whether the quoted “$0 down” payment assumes you assign credits away
Secured options (HELOC / home equity loan) change collateral risk—see When to use a home equity loan vs HELOC.
Exit costs when you move
Loan path
- Request a payoff quote before listing.
- Confirm whether the loan is unsecured, UCC, or otherwise noted.
- Budget closing-week payoff from sale proceeds if needed.
Lease / PPA path
- Read transfer approval, credit checks on the buyer, and transfer fees.
- Get the buyout formula in writing (sometimes remaining payments × factor, or fair-market schedules).
- Ask what happens if the buyer refuses the transfer—buyout may land on you at closing.
A “low monthly” lease that needs a $12,000 buyout to clear title is not cheap when you relocate in year seven.
Worked example: loan vs lease on a move
Alex installs a ~7 kW system.
| Option | Structure | Month 1 payment | Year-7 move |
|---|---|---|---|
| Loan via credit union / solar lender | $28,000 financed after incentives assumed on Alex’s return; 10-year, ~6.5% APR sketch | ~$318 | Payoff roughly mid-teens (amortization-dependent); buyer gets owned system |
| Lease | $0 down; $145/mo with 2.9% annual escalator | $145 | Buyer must qualify for transfer or Alex pays a contract buyout (~$9,000–$14,000 sketch in many real contracts—get yours in writing) |
Alex chooses the loan because they expect to move within eight years and want a clean payoff path. The lease’s lower month-1 payment was real; the exit optionality was the deciding cost.
Pressure cues to reject
- Same-day “rate expires at midnight” without a written APR, term, and amount financed
- Refusal to label loan vs lease vs PPA
- Incentives quoted as guaranteed refunds without tax-pro caveats
- Production estimates with no remedy if actual kWh misses by a wide margin
Pair electrical upgrades (panel, EV charger) with the same discipline: EV and home electrical financing.
Checklist
- Label every offer: cash, loan, lease, or PPA.
- Write cash price, amount financed, APR, term, fees, escalator, and buyout/transfer rules.
- Confirm who claims tax credits and rebates.
- Model a home-sale year before you sign a 20–25 year lease.
- Compare at least one credit-union or bank loan quote to dealer-arranged financing.
- Keep the signed contract and payoff/buyout contacts in the house file.
Educational only. Not tax, legal, lending, or contractor advice. Incentive rules and contract terms vary; confirm with IRS materials, your tax professional, and the written agreement.