Many homeowners are fed up with the price of electricity and are considering solar panels. Solar panels not only save the environment but also help save money on electrical costs. Nowadays, it’s easy for anyone to switch to solar, thanks to lease options. When it comes to getting solar panels for your home, there are two options: leasing vs. buying solar panels.
Which is the better option? Buying solar panels can represent a significant upfront investment, so it’s not surprising that leasing has become a popular choice—but is it a wise one? Here’s some more information to help you decide whether you should lease or buy solar panels.
Buying Solar Panels: What You Need to Know
Purchasing solar panels—whether with cash, through an option like a home equity loan, or through special solar financing—has been the default for most of the industry’s lifespan. For most homeowners, the benefits are clear.
Pro: Cost Savings
While solar panels can cost $15,000 or more, they save you a lot of money over time. You are locked into a price, with no surprise increases. Not only can you cut your electricity bill by 50% per month, but you also qualify for rebates, tax credits, and other incentives. You can buy your solar panels with cash or get a loan. Most loans are available for 10-20 years.
Buying solar panels gives you an asset, much like buying a house. This means that you own the solar panels, which makes it easier to sell your home when that time comes. Studies show that homes with solar power sell 20% faster.
Pro: Complete Control
Leasing solar panels can give the leasing company too much power over questions like the number and placement of panels. As the purchaser, you retain complete control over those decisions for your home.
Con: Upfront Costs
Buying solar panels does require money upfront. Your investment will pay off over time, but the initial costs can seem daunting. You’ll either need to pay cash or take advantage of financing options.
Leasing Solar Panels: What You Need to Know
Leasing sounds like a great plan and a potential way to avoid the initial investment, but there are a number of concerns you might not be aware of. Here is what you need to consider.
Pro: No Upfront Costs
If you really want solar power but can’t afford it or qualify for a loan, leasing might be your only option. Typically, there are no upfront costs, and the solar panel lease cost is fairly affordable, ranging from $50 to $250 a month. The premise of $0 upfront looks good to many homeowners. In fact, in 2014, 72 percent of people who had solar power installed did so through leasing.
Pro: Immediate Savings
You can take advantage of the benefits of solar power right away. You can save money your first month using solar panels since your new electrical bill and lease payments combined should still be less than what you were paying before.
Con: Reduced Savings
While you can save money by leasing, you’re looking at a lot less. When you buy solar panels, you can save roughly 50% off your power costs. When you lease the panels, the savings are reduced to only 10-30%. Plus, since you don’t own the solar panels, you don’t qualify for any rebates or incentives.
Con: Cost Increases
Solar panel lease costs typically increase every year. You are not locked into a price as you are when you purchase solar panels, so a $20,000 system could cost $30,000 or more over the life of a lease due to rate increases from the leasing company. Keep in mind that many lease agreements include an escalator clause, which means they can increase payments by 3 percent each year—meaning your potential savings dwindle even further.
Con: Possible Future Purchase
If you sell your home before the lease is up, you may end up having to buy the solar panels anyway—just for the new buyer to use them! Either you or the buyer will have to buy out the lease, and since most buyers are reluctant to do so, the homeowner is usually the one to eat that cost—which can be $20,000 or more.
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At Smart Wave Solar, we decided not to offer leasing options since it tends to be such a bad deal for the customer. When it comes to leasing vs. buying solar panels, buying is the clear choice. While there are upfront costs, you’ll realize more cost savings over time. Plus, you own your own equipment, which is attractive if you ever want to sell your home.
To learn more about the benefits of buying vs. leasing solar panels or to get a quote, contact Smart Wave Solar today.