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If you're thinking about investing in solar technology, you'll find plenty of different ways to do so. Some homeowners choose to rent solar equipment from a solar company. Others choose to buy solar equipment, making fixed monthly payments for as long as necessary. Whether it's better to own or lease solar panels depends on your unique situation. First, you'll need to understand your options and how they differ.
Leasing solar panels allows you to access solar energy's financial benefits without buying your own home solar system. A solar provider will install the equipment and charge you a fixed monthly fee.
A solar lease could save you money on your electricity expenses. Most solar lease contracts last for a couple of decades, during which time the provider will keep an eye on the system's hardware and performance. At the end of your lease, you can choose to:
How does a solar power purchase agreement (PPA) differ from a solar lease? If you're not familiar with the ins and outs of the solar industry, the two options might seem interchangeable — in reality, a PPA and a lease vary in important ways:
Transferring solar panel leases can get complicated. If you're selling a home with leased solar panels, you'll have to either cover the remaining lease payments or find a buyer who's willing to take them over. Sometimes, sellers have to reduce their home's price to entice buyers.
In addition, the buyer will have to meet the solar company's minimum credit standards to be able to take over the lease. Leased solar panels, when buying a house, also affect the borrower's debt-to-income ratio, which can complicate qualifying for home loans.
Plenty of reasons might compel you to sign a lease or PPA for solar rather than outright buying the equipment. Borrowing solar equipment offers many unique advantages. However, it also has disadvantages when compared to buying.
If you're trying to decide whether you want to buy or lease solar equipment, it's helpful to weigh the pros and cons of leasing. Here are some of the benefits of leasing solar panels rather than buying:
Of course, leasing solar panels also has its disadvantages. Here are some reasons you might want to buy instead of lease:
Deciding whether to lease or buy solar panels is a big decision. Weigh all your options and consider your personal goals. You may also want to meet with a personal financial advisor to help you evaluate the various choices.
If you have a strong credit score, reasonably high tax liability and you're looking for a long-term investment option, you may want to buy the solar equipment. If you have an imperfect credit score, low tax liability and you're looking for immediate savings, you may want to lease instead.
Once you've decided to lease solar equipment, think about whether you'd prefer to pay a set monthly amount or a variable amount depending on the energy you use. This will help you choose between a traditional lease or PPA plan.
Whether you decide to sign a solar lease or buy the equipment, you can help the environment by joining the alternative energy movement. Another great way to do so is by switching to a 100% renewable energy plan, which is offered by many energy providers. While you won't get the same cost-saving benefits and tax incentives that come with owning or leasing solar panels, you'll still be able to rest easy knowing you've significantly reduced your home's carbon footprint.
If you're looking for ways to lower your energy costs, consider using EnergyBot. With EnergyBot, you'll get matched with the best energy plan for you in minutes. Start comparing rates with EnergyBot to see how much you could save.