Cash or loan, what’s the best way to pay for a solar system for your home?

Francisco CastroMay 3, 20193730

The best way to pay for solar 

When it comes to paying for a solar power system for your home, a lot depends on your current means. 

Given the drop in prices for solar panels and equipment in recent years, the average price of a 5 kW solar power system - the standard for an average home - is now between $10,000 and $15,000 and most people can pay that with a credit card or with cash, instead of a loan.

The decision is obviously up to you and here we present you with some things to consider when it comes to financing for your solar power system.


Similar to car leases, in a solar lease you basically “rent” your photovoltaic (PV) installation. The actual parts and labor come free and you simply pay for the electricity your rented system generates. 

It’s an enticing proposition, especially because there’s no upfront costs or excessive paperwork. The lessor takes care of that entirely, as well as the maintenance.

But with a lease you don’t get to claim the tax credits and rebates for installing solar panels. 

Leases also come with escalator payments, which increase your monthly bills every year.

Many solar leases also come with an option to buy the system after the 10, 15, or 20 years of the contract are up, but often the buyout option is quite high. And if you must sell your house, you’re likely to encounter problems finding a buyer who takes on the lease. 

Pay with cash

If you can afford it, purchase it with cash, or a credit card.  Paying cash also simplifies the process of going solar, since there is no need to secure a loan, find a lease or undergo credit checks

You might even consider accepting one of those zero-interest credit card offers you’ve been getting on the mail, allowing you to pay for the solar array interest free for a number of months.

The advantages of buying your solar system is that you’ll be the outright owner from the start and you can use incentives, rebates and credits to offset the cost.  
You’ll avoid monthly loan interest charges, and every penny you save on electricity will go back toward your payback period.

If you size the solar array to meet your total solar needs, you might be paying just a few dollars a month in connectivity and other electric fees, while you enjoy reliable energy.

If your utility allows for net metering, you can also sell extra power produced by your system to the electric grid in exchange for credit or cash, increasing the affordability of your system.

This will speed up your payback periods and a guaranteed return on investment (ROI). In most cases, recuperating the total cost of your solar power system takes as little as 5-6 years (6-8 years on average). Given that solar arrays have an estimated lifespan of 20-25 years, your system will be paid off for two decades or more.

To find out how much a solar power system for your home in Texas will cost, you can access the Hahasmart price checker that provides you with an estimate of equipment and installation costs by simply noting your home address and monthly electricity bill. They’ll even help you contact a reputable solar installer in your area. 

Solar panels and equipment is also very reliable, so you won’t have to do much maintenance either. 

If you also decide to move and sell your home, you’ll be able to get more money for it and will have a much easier time finding buyers. According to the National Renewable Energy Laboratory (NREL), for every $1 in annual electricity bill savings that your solar PV system offers, the property value of your home increases by an average of $20.

A loan

You can use a home equity line of credit to finance the installation of the solar power system, or you can also opt for a low-interest solar loan, where you borrow money from the bank to pay for your PV installation (parts and labor). 

This is a good option if you don’t have all the cash available to pay for the system or don’t want to face the often high interest of credit cards.

With a loan, you simply send monthly payments to the bank to pay it off. These payments are definitely lower than what you currently send to the utility company. Thus, you enjoy instant electricity bill savings.

Just as with cash, solar loans offer predictable payback periods and a guaranteed ROI. Thereafter, the solar installation is 100% yours.

In addition, in most cases you can claim the interest on your loan to purchase the system as a deduction on your taxes, something you cannot do with the solar lease program.

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