Let’s Talk Numbers
Understanding Your Solar Investment
Solar is a big investment. How you pay for it can have a big impact on how much you save over time.
Cash, loans, leases, and power purchase agreements (PPAs) all work differently. The right option for you depends on your budget, your goals, and how long you plan to stay in your home.
We’ll help you understand the options, the potential savings, and what to consider before you make a decision.
First, a Little Perspective
How Much Does Solar Cost?
A typical home solar installation costs around $15,800 after incentives, although the actual price can vary based on system size, equipment, roof design, labor, and other factors.
That gives you a useful starting point, but it’s just a benchmark. Your system could be smaller or larger, and your investment could be significantly different depending on your home and energy needs.
You don’t necessarily need to have that amount sitting in the bank. You can purchase a system outright, finance it with a loan, or choose a third-party ownership option such as a lease or PPA.
Four Ways to Pay
Solar Financing Options
1
Cash Purchase
You pay for the entire system upfront and own it outright.
Best for: Homeowners who want to avoid financing costs and maximize long-term savings.
2
Solar PPA
A third party owns the system, and you pay for the electricity it produces at an agreed-upon per-kilowatt-hour rate. PPAs have become increasingly popular as homeowners look for ways to go solar without taking on the full upfront cost.
Best for: Homeowners who want little or no upfront cost and a predictable rate for the solar energy they use.
3
Fixed Solar Lease
A third party owns the system and you pay a fixed monthly amount to use it, regardless of how much electricity the system produces.
Best for: Homeowners who want predictable monthly payments without purchasing the system themselves.
4
Solar Loan
You borrow money to purchase the system, then repay the loan over time. You own the system.
Best for: Homeowners who want to own their solar system without paying the entire cost upfront.
The Big Picture
How Long Until Solar Pays Off?
There's no universal payback period. System cost, energy production, electricity rates, utility policies, and financing terms all affect the calculation. The way you finance solar also changes what “payback” means.
1
Cash Purchase
With a cash purchase, payback is straightforward: compare the system's upfront investment with the electricity savings it generates over time. The average estimated payback period for a cash purchase is 7.5 years, but the exact time frame can vary depending on a variety of factors.
2
Solar PPA
With a PPA, you don't purchase the system, so there's no traditional payback period. Instead, your savings depend on the PPA rate, system production, utility rates, and contract terms.
3
Fixed Solar Lease
A lease works similarly. Rather than recouping an upfront investment, you're comparing your lease payments with what you would have spent on utility electricity.
The better measure is cumulative savings over the life of the agreement, not ROI.
4
Solar Loan
A solar loan lets you spread the investment over time. Most of the solar loans we offer are $0 down, so it is a great way to start enjoying the benefits of solar without having to come up with any cash out of pocket.
The Fine Print
Understanding Interest Rates
There's no single interest rate you should expect to pay. Solar loan rates vary based on the lender, your credit, the loan term, and the financing option you choose. But the interest rate isn't the whole story. A lower monthly payment may mean a longer loan term and more interest paid over time.
When comparing options, look at the APR, loan term, fees, and total repayment amount. Rates also follow broader economic trends, so the options available today may not be the same a few months from now.
It Pays to Compare
Choosing a Solar Lender or PPA Provider
There's no single best lender or PPA provider for every homeowner. Financing terms can vary significantly between companies.
You'll encounter providers such as LightReach, Maxwell, Participate Energy, and Credit Human Credit Union, among others. It's also worth checking with your own bank or credit union. They may offer a home-improvement, home-equity, or other loan with competitive terms.
For any long-term solar agreement, look beyond the monthly payment. Understand the terms, total financial commitment, and what happens if you sell your home before you sign.
FAQs
Have more questions? Find answers to common questions about solar, batteries, installation, and more on our FAQ page.
View All FAQs
How Does My Credit Score Affect My Solar Financing Options?
Your credit score can affect your ability to qualify for financing, as well as the rates and terms you're offered. This matters most with solar loans, but credit can also factor into lease and PPA approval.
Why Is the APR on a Solar Loan So High?
Solar loans can have higher rates than some other types of financing; however, we have some very competitive options through credit unions, including traditional loans and HELOCs. Contact us for current financing options.
When comparing loans, look at the APR, term, fees, and total amount you'll repay, not just the monthly payment.
Are There Ways to Get a Lower Interest Rate?
Yes, potentially. Check multiple solar lenders, but don't overlook your own bank or credit union. They may offer competitive home-improvement or home-equity loans.
If you're buying a home and adding solar at the same time, you may also be able to include the system in your mortgage, depending on the lender and loan program.
What Is Net Metering, and How Has It Changed?
Net metering allows homeowners to receive credits when their solar system sends excess electricity to the grid.
The key question is how much that electricity is worth. Some utility programs credit excess solar at or near the retail rate, while others pay less. That can have a big impact on your potential savings.
Rules vary by state and utility, so your solar savings should be based on your specific home and utility, not a national average.
Let’s Talk Solar
What can a solar installation do for your home? Whether you’re ready to make the switch or just exploring your options, we’re here to answer your questions.