Best Way to Pay for Panels & Why It Matters
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Solar is a big-ticket item. Like any major addition to your home, it comes with a price tag that many homeowners would be unable to pay for in a single transaction. Luckily, most solar installers have multiple options available. We hope to help you understand the different ways to get solar and why the method you choose matters.
How Can Homeowners Pay For Solar?
There are three main ways that homeowners can get solar: buying it in a single purchase, getting it financed, or leasing it. Which of these options a homeowner chooses will dictate their payments going forward and the benefits that they can reap from their solar installation. These methods weren’t created equal, with one being clearly worse than the others.
Purchasing Solar With Cash
For those who have a good amount of savings, buying solar in a single purchase is the best option. Many solar companies will offer a discount to those who buy solar with a cash purchase. This is because the company does not need to go through the hassle of financing a loan or setting up a monthly payment.
If you have a lot of cash saved up and are interested in solar, this is by far the best option. You get the benefits of solar energy immediately, with a small to non-existent power bill, solar incentives on your tax payments, and more. Additionally, you end up saving more money in the long run with the discount on the purchase and no interest.
Financing Your Solar Purchase
The second option, and the one which most homeowners take, is financing your solar. This is where you take out a loan to pay for your solar. Because the loan has a fixed payment amount, your loan payments will be lower than your power bill.
Additionally, solar loan payments will insulate you from fluctuations in the energy market. The prices of electricity have been consistently rising over the years with no sign of stopping. Price increases are likely going to get worse as fossil fuels become increasingly scarce and more difficult to extract.
To get your solar purchase financed, you will need to have a good credit score. Go Solar Group works with financiers who will accept a 650 credit score, but many will require 700. It is not recommended that you finance solar for your home if you have other large purchases that you’re still paying off.
What Does Leasing Solar Entail and Why Is It Bad?
Leasing solar is the third and final option. It is also by far the worst. Solar leases have many hidden fees, lose out on incentives, take away control of your home’s roof, and don’t bring a lot of savings. Solar leases are often disguised as different kinds of sales pitches, which is just one of a few potential scams.
The Hidden Fees of Leased Solar
One of the ways that some solar companies will try to trick you into a bad solar deal is by offering you plans that you don’t need. For example, many solar companies will offer solar service plans or maintenance plans to people who lease solar from them.
The problem with this is that solar panels need little maintenance over the years. What maintenance your panels do need, which is usually cleaning or removing snow, can easily be done yourself.
Losing Out on Solar Incentives by Leasing
One of the main draws of residential solar is that incentives have made it even cheaper and easier to install than in the past. Over the past ten years, solar prices have plummeted while installations have skyrocketed. The federal solar tax credit is a big part of that, but utility and municipal level incentives are also a big draw.
When you lease your solar panels, you don’t actually own them and therefore won’t get the incentives that come from them. The solar tax credit, net metering, and other incentives will instead go to the company which installed your panels.
Losing Control of Your Roof
One of the most problematic consequences of leasing solar is that you lose control over your roof. If you purchase solar, you can remove the panels from your roof at any time. You can also include them as a feature of your home, should you choose to sell your house.
With leased solar, you don’t get that option. The solar company decides where to put the panels and has total control over whether they stay or come off. Of the hidden fees mentioned earlier, one of the worst comes when trying to remove leased solar from your home early. It often carries a very large fee.
Finally, it can be difficult to sell a home with a leased solar installation. The person who buys the home will have to agree to take on the contract. Many people will not want to take on a contract for solar power if they don’t actually own the panels, which can make your home difficult to sell.
Leased Solar Does Not Bring Good Savings
While purchasing solar can bring many savings, leasing solar doesn’t necessarily bring as many. Solar lease prices tend not to be much lower than the prices you would pay to your utility company. In exchange, you lose control of your roof and get saddled with a long contract.
Why the Way You Pay Matters
As we’ve seen, some ways of paying for solar are much better than others. When it comes to purchasing solar, it is better to buy it in one big purchase than to get financed. However, financing solar is still a very respectable option and the one that most homeowners will go with.
Both purchasing solar with cash and financing it will bring good savings to your home. Both methods allow you to benefit from solar incentives like the federal solar tax credit. They also allow you to participate in net metering, which can potentially eliminate your power bill completely.
Leasing solar, on the other hand, does not give you any of these incentives. It will end up costing more over the decades than financing a solar purchase. A solar purchase will eventually be paid off, after which you can enjoy your free solar energy with no more payments. Leasing solar panels will make you have a payment for as long as the panels are on your home — which can be 20 years or more.
Therefore, if you want to get the best savings, purchasing solar is far superior to leasing.