Solar Financing: Cash vs Loan vs Lease
Compare the real 25-year cost of buying solar with cash, financing with a loan, or leasing. See why cash has the highest IRR and leases deliver the lowest long-term value.
How this calculator works
- Compare the true 25-year cost of three ways to pay for solar: cash, loan, and lease/PPA.
- Enter system size, $/W price, loan rate and term, and your expected annual bill savings. The table shows upfront cost, monthly payment, and 25-year net for each option.
- This exposes the hidden cost of financing — a loan at 7% adds years to payback, and a lease caps your long-term savings.
Disclaimer: All figures are estimates based on public 2026 data (EIA, NREL PVWatts, DSIRE) and your inputs — not a quote, tax advice, or financial advice. The federal residential solar credit (Section 25D) expired December 31, 2025. Verify with your utility, a licensed installer, and a tax professional before signing anything.
Example scenarios
6 kW @ $3/W: A typical $18,000 system.
8 kW + EV @ $2.80/W: Larger system, lower $/W — common for EV households.
Data & algorithm
- Loan payment = standard amortization at your rate/term.
- Cash net 25yr = −gross cost + annual savings × 25.
- Lease net 25yr = −monthly lease × 300 months + annual savings × 0.85 × 25 (lease value cap).
Official data sources
- Installer quotes (typical 2026 pricing), LBNL Tracking the Sun.
All figures dated 2026. Incentives and rates change — verify current values with your utility and the administering authority before making decisions.
Frequently asked questions
Is a solar loan worth it?
Yes if you want solar without the upfront cost — it beats leasing in most cases because you own the system and the incentives. Just expect 1.5–3 extra years of payback from interest.
Why is leasing the lowest long-term value?
You never own the panels, the tax credits go to the lessor, and 20–25 years of lease payments plus escalators eat most of your savings.