Cash is mathematically best, loans are usually fine, and leases are almost always worse than the marketing makes them sound. Here's the actual breakdown.
Cash purchase: the gold standard
Pay $20,000–$30,000 upfront, claim the 30% federal credit on your next return, own everything outright. Payback hits at year 6–10 in most states. After that, every kWh is free for 15+ more years.
Best for: Anyone who can write the check without disrupting their emergency fund.
Solar loan: 90% of cash, with leverage
Typical 2026 solar loans run 6.99–9.99% APR for 15–25 year terms. Most are unsecured. The 30% federal credit is yours to keep — apply it to the loan principal at month 18 to drop the payment.
The math that surprises people: at 7.99% over 20 years, total interest on a $25,000 loan is about $25,000 — roughly equal to the principal. But over those 20 years, the system saves you $40,000–$60,000 in most states. Net positive even after interest, in most cases.
Watch for: "dealer fees" baked into the loan (typically 15–25% markup over the cash price). Always ask for the cash price first, then ask what the financed price is. If the gap is more than 5%, walk away — there's a fairer lender out there.
Solar lease / PPA: the trap
You pay $0 down, the leasing company owns the panels, and you pay them a monthly fee (lease) or a per-kWh rate (PPA) that's typically 10–30% lower than your utility rate.
Why this looks great in marketing: "Save money from day 1!" Technically true.
Why it usually loses on net:
- You don't get the 30% federal credit — the leasing company does.
- Most leases have a 2.9% annual escalator, locking in price increases that may exceed your utility's rate hikes.
- Selling your house gets harder. Buyers either have to assume the lease (often a deal-breaker) or you have to buy out the contract (often $15,000–$25,000).
- You're not building any equity in the system.
Side-by-side, 25-year net
| Option | Year-1 cash flow | 25-year net (typical) | Payback (years) |
|---|---|---|---|
| Cash | −$25,000 | +$35,000 | 7 |
| Loan (8% / 20yr) | −$0 to −$2,000/yr | +$15,000 | 10 |
| Lease (2.9% escalator) | +$300/yr | +$5,000 | n/a |
The right move for most people
If you can afford cash, do cash. If you can't, a HELOC or solar loan from a credit union (not the installer's preferred lender) usually beats whatever the door-to-door salesperson is pitching. Avoid leases unless you're explicitly trying to avoid ownership for short-term-residence reasons.