Short answer: paying cash usually gives the biggest lifetime savings. A loan lets you own the system with no money down, if the interest rate doesn’t eat the savings. Leases and power purchase agreements (PPAs) cost nothing upfront and have become more competitive in 2026, because the solar company can still claim a commercial tax credit that homeowners lost, according to EnergySage.
The four options at a glance
| Cash | Loan | Lease | PPA | |
|---|---|---|---|---|
| Who owns the panels | You | You | Solar company | Solar company |
| Upfront cost | Full price | Often $0 | Usually $0 | Usually $0 |
| What you pay | Nothing after install | Monthly loan payment | Fixed monthly payment | Price per kWh produced |
| Maintenance and repairs | You | You | Company | Company |
| Typical term | n/a | 10-25 years | 20-25 years | 20-25 years |
| Lifetime savings | Highest | High to medium | Lower | Lower |
Cash
No interest, no contracts, full control. At the national average of about $3.36 per watt (Solar.com), a 7 kW system costs about $23,520. Cash payback is roughly 7-14 years depending on your rates; see how to calculate solar payback.
Loan
You own the system and keep any state incentives. The key test: is your monthly payment lower than your monthly bill savings? Watch for “dealer fees” built into low-rate loans, which raise the system price. Compare the cash price with the financed price on every quote.
Lease and PPA
- Lease: a fixed monthly payment for the system’s output.
- PPA: you pay per kWh the panels produce, at a set rate.
- Escalators: many contracts raise the price 1-3% a year. EnergySage suggests aiming for 0-1% and avoiding anything above about 3%.
- Selling your home: the buyer must take over the contract, or you may have to buy it out. That can complicate a sale within 5-10 years.
- Incentives: the company, not you, claims tax credits and state incentives. Competitive providers pass part of that on as lower prices.
Which one fits you?
- You have the cash and will stay 10+ years: buy.
- You want to own but lack cash: a loan with a transparent rate and no inflated dealer fee.
- You want savings from day one with no risk of repairs: a lease or PPA with a low escalator and a price per kWh clearly below your utility rate.
- You rent or have a poor roof: look at community solar.
Red flags in any solar contract
- Escalators above 3% a year.
- “Free solar” pitches that are really leases.
- Pressure to sign the same day.
- Savings estimates that assume big utility rate increases without saying so.
Learn what to look for in how to read a solar quote.
FAQ
Can I buy out a lease later? Many leases allow it; prepaid leases often transfer ownership after about six years, per EnergySage.
Does a lease affect my credit? Providers usually run a credit check.
General information, not financial or tax advice.