Solar Lease vs. PPA vs. Cash Purchase vs. Loan: Which Pays You Back?

Every solar quote you receive will come with at least one financing option — and the financing structure matters as much as the panel brand. The same 7 kW system can leave you $30,000 ahead over 20 years or roughly break-even, depending on how you pay for it.

The four common structures, with the actual numbers.

Cash purchase

You pay upfront, own the system outright, and keep 100% of the savings.

• Typical cost: $17,000–$24,500 before incentives for a 7 kW system; $12,000–$17,000 after the 30% federal Residential Clean Energy Credit.
• 20-year savings (median climate, typical net metering): $25,000–$45,000.
• Pros: highest lifetime return, simplest paperwork, you own everything including the federal tax credit, no debt.
• Cons: tax credit is non-refundable, so you need ~$5,000+ in federal tax liability that year to capture the full benefit; large upfront capital commitment.

This is the best deal if you can afford it and have the tax liability to absorb the credit.

Solar loan

You finance the system, own it from day one, and the loan acts like a mortgage for solar.

• Typical terms: 10–25 years; 6–10% APR depending on credit.
• Monthly economics: target payment ≤ your prior electric bill so you're net-positive from month one.
• Pros: own the system and get the federal tax credit; no upfront capital; system value transfers cleanly when you sell.
• Cons: dealer fees on solar loans can run 15–25% of system cost (often hidden as a "no-fee" loan with higher contract price); interest erodes some of the savings.

Watch for "dealer fees": a $30,000 loan that prices the same system $7,500 higher than a cash deal isn't actually fee-free. Ask any loan-financed installer for their cash price separately.

A clean solar loan (no dealer fee, market interest rate) is often within $5,000–$10,000 of cash purchase economics over 20 years. A dealer-fee-heavy loan can erode half of the savings.

Solar lease

A third-party (Sunrun, Sunnova, etc.) owns the panels on your roof. You pay a fixed monthly lease in exchange for using the electricity.

• Typical terms: 20–25 year lease, with 1.9–2.9% annual escalator.
• Economics: monthly lease payment generally 15–30% below your prior electric bill.
• Pros: zero upfront cost; the leasing company handles maintenance, monitoring, and inverter replacements.
• Cons: you don't own the system, don't get the federal tax credit (the lessor does), and selling the home becomes harder — buyers either need to assume the lease (rare and complex) or you pay an early-termination fee.

20-year savings on a typical lease: $5,000–$15,000 — meaningfully less than purchase. The lessor keeps the difference.

Power Purchase Agreement (PPA)

Similar to a lease, but instead of a fixed monthly payment, you pay per kWh that the system produces.

• Typical terms: 20–25 years; PPA rate locked in at $0.10–$0.16 per kWh with 1.9–2.9% annual escalator.
• Economics: you save on the spread between the PPA rate and what you'd otherwise pay your utility.
• Pros: zero upfront; risk of underproduction falls on the system owner, not you.
• Cons: same as lease — you don't own the system, the tax credit goes to the third party, and home-sale complications.

20-year savings: $4,000–$12,000.

The home-sale problem with lease/PPA

This is the part lease/PPA sellers downplay. When you sell the house:

• Cash or loan purchase: the system transfers as part of the property. Sale price typically reflects most or all of the panel value. Easy.
• Lease/PPA: the buyer must qualify to assume the contract (many won't), or you pay to terminate early (often $15,000–$25,000), or you remove the panels at your expense.

Real-estate listing data shows leased-solar homes selling 5–10% slower than otherwise-comparable homes. Realtors increasingly screen out leased-solar listings or require buyout before listing.

The clean comparison

Over 20 years, on the same 7 kW system in a moderate-NEM state:

Path	Out-of-pocket day 1	20-year net savings	Home-sale impact
Cash	$17,000	$25,000–$45,000	Adds value
Clean loan (10-yr, no dealer fee)	$0	$20,000–$35,000	Adds value
Dealer-fee loan	$0	$10,000–$22,000	Mostly adds value
Lease (with escalator)	$0	$5,000–$15,000	Often hurts sale
PPA (with escalator)	$0	$4,000–$12,000	Often hurts sale

If you can afford cash or a clean low-fee loan, that's where the money is. Lease and PPA make sense when you genuinely can't afford either of those — and even then, get cash and loan quotes too so you can see the spread.

Compare licensed installers in your state to start collecting quotes.