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 October 1, 2026Sources: DSIRE, NREL, IRS
The same panels can cost $21,000 or $47,000 over their life — the difference is purely how you choose to pay. Photo: American Public Power Association / Unsplash
Updated October 2026 — federal credits have ended. The One Big Beautiful Bill Act (signed July 4, 2025) ended the 30% federal Residential Clean Energy Credit (25D: solar, batteries, geothermal) and the Energy Efficient Home Improvement Credit (25C: air-source heat pumps, up to $2,000) for anything installed after December 31, 2025. Systems completed by Dec 31, 2025 can still be claimed on a 2025 return. Any 30% or $2,000 figure on this page applies only to those installs — our calculators now default to $0 federal credit. What is still available in 2026 →
Quick answerOver 25 years, paying cash is almost always cheapest because you avoid interest. With no federal credit for 2026 installs, a $21,000 system costs $21,000 cash, about $35,000 in total payments financed at 7.5% over 15 years, 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)
$21,000
Loan (net)
$35,041
Lease (25 yr)
$47,499
"Net" figures include no federal credit (it ended for installs after Dec 31, 2025). 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 total what each path costs over 25 years (no federal credit for 2026 installs), then rank them.
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?
Federal credit (2026 install)?
Lifetime cost
Cash
Full price
Yes
No (ended after 2025)
Lowest
Loan
$0–low
Yes
No (ended after 2025)
Low–medium
Lease
$0
No
Owner may claim 48E
High
PPA
$0
No
Owner may claim 48E
High
Cash wins on pure cost because you skip interest. A loan is the best balance for most people — you still own the system and its savings 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. For 2026 installs there is no 30% federal tax credit on any path, so the comparison is simply cash price versus total loan payments versus total lease payments. 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, keep all the savings and state incentives, and gain the home-value increase. A lease has $0 down and, for 2026, the leasing company may still claim the commercial Section 48E credit (if construction begins by July 4, 2026 or the system is in service by the end of 2027), which can lower the lease rate. You still 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 in 2026?
No. The 30% Residential Clean Energy Credit ended for systems installed after December 31, 2025, whether you pay cash or borrow. Systems completed by that date can still claim it on a 2025 return. With a lease or PPA, the third-party owner may still claim the commercial Section 48E credit if construction begins by July 4, 2026 or the system is placed in service by the end of 2027.
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; the PPA company, not you, may claim the commercial Section 48E credit through its deadlines.
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 →
