4-30-2015 Should You Lease or Buy Your Rooftop Solar System?
The two giant financing options in the solar world include loans and leases. While dealing with such limited choices may appear easy, looking at the details and implications of each choice can sometimes be daunting. Don’t get lost in the sea of financing information out there. Here’s a brief guide to determining whether to buy or lease your system.
Several factors that will more than likely affect your choice to lease or buy include your current financial situation, your financial goals, and the desired return on your solar system.
Buy Your System If
You can Afford the Down Payment
If you can pay for the system in full, or if you can afford the down payment, don’t worry about looking for leases. The average residential rooftop solar system costs anywhere between $15,000 and $30,000 before rebates and incentives. After you add in the tax credits and rebates, you may be able to reduce the cost of your system by up to 50%.
You can Benefit From the Federal ITC
When you buy your system, whether in full or through a loan, you become the system’s owner. As the owner, you get all the benefits that come with solar ownership, like any rebates and tax credits. If you know that the Federal Investment Tax Credit (ITC) will benefit you and that you can use all of it, it’s best to buy your system. There’s no need to give up your ITC if you can afford your solar system and would benefit from the tax credit.
You Plan on Selling Your House in the Future
Most solar leases last about 20 years, so if you’re planning on selling your home before then, you’d be better off buying your system. Rooftop solar does add value to a house, but only if the owners buy the system. There have been reports of solar leases damaging home sales. They either cost the homeowner the sale, or they significantly reduce the value of the home to the homebuyer. Many potential homebuyers don’t want to take on a solar lease, even if it does make financial sense.
You’re ok With Maintaining It
If you buy your rooftop solar system, you’ll be responsible for ensuring that it’s in working order. However, it’s rare that solar panels need serious maintenance, and most panels come with a 25-year performance warranty. There’s really not much to keeping solar panels in working condition, but in the off chance that something does go wrong, it’s on you to either fix it or find an installer who can.
Lease Your System If
You Don’t Have the Money to Buy One
If you can’t afford the downpayment of a system but you still want to go solar, you can get a solar system for $0 down to about $3,000 down. However, you’ll be locked into the lease for a while. Most leases run 20 years, so if you’re willing to add another monthly payment to your expenses, leasing may work for you.
You Can’t Use the Federal ITC
There are some instances in which people just can’t use or don’t want to use the federal ITC. If you’re in a situation like this, then you may want to look into leasing. Two of the big motivators for buying a rooftop solar system are tax credits and rebates. However, if you can’t use the ITC, you may be better off leasing your system.
You Don’t Want to Worry About Maintaining It
If you don’t want to be responsible for your solar system in the event that it malfunctions, then leasing is probably best. Solar panels break downs are rare, but they do happen. When you lease a system, the company will monitor it for you, so they should know when something is amiss. The leasing company should also take care of repairing it because it’s their property. Another benefit of leasing your solar system: you may be able to get free online tracking so you can see your system’s performance.
Weigh Your Options
There are several factors and situations to consider before you make the decision to buy or lease your solar panels. Ultimately, you need to decide which route will help you achieve your financial goals and will provide you with the best return on your investment. However, you can rest assured that whichever decision you make, to buy or to lease, will have a positive environmental impact.