Compare all four ways to pay for solar — cash, loan, lease and PPA — side by side, and see which has the lowest lifetime cost for your system.
SCReviewed by Sarah Chen, Energy AnalystUpdated May 28, 2026Sources: DSIRE, NREL, IRS
The same panels can cost $14,700 or $47,000 over their life — the difference is purely how you choose to pay. Photo: American Public Power Association / Unsplash
Quick answerOver 25 years, paying cash is almost always cheapest because you avoid interest and keep the full 30% credit. A $21,000 system nets ~$14,700 cash, ~$21,700 financed at 7.5%, while a $110/month lease can exceed $47,000. A loan is the best balance for most homeowners.
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Compare your options
$
$
%
15 yrs
$
Leases typically escalate ~2.9% per year.
Cheapest over 25 years
Cash
lowest lifetime cost
Cash (net)
$14,700
Loan (net)
$21,700
Lease (25 yr)
$47,000
"Net" figures apply the 30% federal credit (cash & loan only). Lease totals assume a 2.9% annual escalator over 25 years.
How this calculator works
1
Enter the cash price
The system's price if you paid in full today.
2
Add loan terms
APR and term to model the financed path.
3
Add the lease quote
The starting monthly lease/PPA payment, escalated 2.9%/yr.
4
Compare net lifetime cost
We apply the 30% credit to cash and loan, then rank all options.
The four ways to pay for solar
Every solar quote boils down to one of four payment methods, and they have wildly different lifetime costs even for the identical system on your roof:
Method
Upfront
Own panels?
Get 30% credit?
Lifetime cost
Cash
Full price
Yes
Yes
Lowest
Loan
$0–low
Yes
Yes
Low–medium
Lease
$0
No
No (installer keeps it)
High
PPA
$0
No
No
High
Cash wins on pure cost because you skip interest and keep 100% of the tax credit. A loan is the best balance for most people — you still own the system and the credit while spreading the cost. Leases and PPAs have the lowest barrier to entry but the highest lifetime cost, and they can complicate selling your home. Dig into that trade-off in the Lease vs Buy Calculator.
The hidden-fee trap
The most common 2026 mistake is choosing a "low APR" loan without comparing it to the cash price. Sub-3% solar loans usually carry a dealer fee of 15–30% folded into the price, so the financed system can cost thousands more than the same cash system. Always ask for both the cash price and the financed price in writing.
Questions
Frequently asked questions
What's the cheapest way to pay for solar?
Paying cash is almost always the cheapest over the system's life because you avoid loan interest and keep the full 30% federal tax credit. A loan is a close second and a good balance if you don't want to tie up the cash. Leases and PPAs are usually the most expensive over 25 years.
Is a solar loan or lease better?
A loan is better for most homeowners because you own the panels, claim the 30% credit, and gain the home-value increase. A lease has $0 down but the installer keeps the tax credit and you pay an escalating monthly fee for 20–25 years, which usually costs more in total.
Why is a low-APR solar loan sometimes a bad deal?
Very low advertised APRs (under 3%) are typically offset by a 'dealer fee' of 15–30% added to the system price. The result is that the financed price is much higher than the cash price. Always compare the cash price to the financed price before signing.
Do I still get the tax credit with a loan?
Yes. With both cash and a loan you own the system, so you claim the full 30% Residential Clean Energy Credit. With a lease or PPA the third-party owner keeps the credit, which is a big reason leases cost more over time.
What is a solar PPA?
A Power Purchase Agreement lets a company install panels on your roof at no upfront cost; you then buy the power they produce at a set per-kWh rate, usually with an annual escalator. Like a lease, you don't own the system or get the tax credit.
Sarah has spent 12 years modeling US residential solar economics, including 4 years contributing to NREL's Distributed Generation Market Demand model. She holds a BS in Mechanical Engineering from UC Berkeley and reviews every calculator and state guide on GreenCalcs against current IRS, DSIRE and EIA data. Read our methodology →
