Solar: Loan vs. Lease
A loan means you own the system and keep any available incentives, at the cost of loan interest. A lease means the leasing company owns the system, often at a lower monthly cost, but the tax incentives typically go to them, not you.
At your inputs, the lease costs $3,400 less over 10 years.
| Finance with a solar loan (you own the system) total cost over the horizon | $24,400 |
|---|---|
| Lease the system (the leasing company owns it) total cost over the horizon | $21,000 |
Breakeven: The higher upfront cost is offset by year 0.0, after which the lease stays cheaper.
- This uses planning estimates you entered, not a contractor quote or guaranteed savings.
- A lower calculated cost does not measure who owns the system, incentive eligibility, or resale complexity; weigh those separately.
What this also tells you: Even if your annual costs are 20% higher or lower than entered, the same option stays cheaper, with the advantage ranging from $2,720 to $4,080.
This is a planning estimate based on your entries. It does not size equipment, determine electrical or building-code compliance, verify incentive eligibility, or replace a contractor quote or professional energy audit.
Why this decision comes up
Loan and lease often get pitched with similar-sounding monthly costs, but the ownership structure underneath is fundamentally different, and worth comparing on real total cost.
How this is calculated
Both paths are compared as total cost over your ownership horizon: net cost plus annual cost carried forward.
A worked example
With the defaults (loan: $0 upfront, $2,440/year; lease: $0 upfront, $2,100/year; 10-year horizon), the lease totals $21,000 against $24,400 for the loan, a $3,400 advantage for the lease at these defaults, though the loan path builds ownership and incentive eligibility the lease does not.
Common mistakes
A common mistake is comparing only monthly cost without factoring in who owns the system, who captures the tax credit, and what happens if you sell your home.
Limitations
This compares total dollar cost only, not ownership, incentive eligibility, or home-sale transfer complexity, all real factors beyond this comparison.
Common questions
Who gets the tax credit with each option?
With a loan, you own the system and are typically the one eligible to claim any federal or state tax credit, subject to your own tax situation. With a lease, the leasing company owns the system and usually captures that credit itself, reflected in a lower lease rate rather than passed to you directly.
Does a lease ever include maintenance?
Often yes, many leases include monitoring and maintenance for the system's life, which is worth factoring in if your loan-financed comparison assumes you'll handle maintenance yourself.
Does leasing affect a future home sale?
It can, since a lease is a transferable obligation the buyer may need to assume or you may need to pay off. Review your specific lease's transfer terms before signing.
Does a lease's fixed payment ever increase over the term?
Some leases include a small annual escalator in the fixed payment. Check your specific contract, since a rising lease payment changes this comparison's later-year totals.
What if I want ownership but can't get loan approval?
A lease or PPA may be your practical alternative if loan financing isn't available to you. Compare the loan-vs-lease and lease-vs-PPA tools together to see your realistic options.