When it comes to paying for a new residential solar system, most people choose to finance it. In fact, a 2023 industry report cited by the Consumer Financial Protection Bureau showed that solar loans made up 58% of the market. Third-party ownership arrangements, which include leases and power purchase agreements (PPAs), accounted for another 23%. This left the percentage of solar bought with cash at just 19% of the at-home residential market.
However, the tide seems to be changing. With financing costs on the rise, 54% of U.S. solar installers reported that customers are now less likely to take out a loan. Instead, cash deals are becoming more common. Recent data shows that cash purchases now represent 49% of sales, while loans have dropped to 41%. The remaining 10% is made up of a combination of options like home equity lines of credit (HELOCs), Property Assessed Clean Energy (PACE) loans, PPAs, and leases. The top financing providers used in the industry are Credithuman, Mosaic, Sunlight Financial, Dividend, and Clean Energy Credit Union.
Summary of Residential Solar Payment Methods
- Cash: If you have the funds available, paying with cash is the clear winner. This is the only way to avoid interest and dealer fees, giving you the greatest long-term savings. While the initial investment is significant, it’s the fastest way to start seeing a return on your money.
- Loans: Solar loans allow you to finance your system over time, but you need to be smart about your choices. Look for loans that don’t include hidden dealer fees. These fees are often rolled into the total loan amount, meaning you end up paying interest on a fee rather than just on the cost of the system itself. Compare personal loans, home equity loans, and specific solar loans to find the best rates without extra costs.
- Third-party ownership (leases/PPAs): These options, like leases and Power Purchase Agreements (PPAs), might seem attractive because they require little to no money down. However, you need to be aware of the significant drawbacks. With a third-party arrangement, a company owns the solar system on your roof, not you. This means they, not you, get the valuable 30% federal tax credit, which is now set to expire for homeowners at the end of 2025. Additionally, many of these agreements have escalator clauses, meaning your monthly payments will increase each year, making it harder to see real savings over time.
Ready to Go Solar? We’re Here to Help.
To make the best choice for your home, you need to understand your payment options. The best option is paying with cash, but every homeowner’s situation is unique. Our experts at Florida Solar Fix will help you navigate your choices. We’ll find a plan that works for you and ensure you get the most from your investment before the federal tax credit expires. Contact us today to get started!
