As more homeowners adopt sustainable practices and lifestyles, switching to renewable energy sources, including solar power, is gaining immense popularity. While finding the best path to solar energy, one important question to answer is, “Is it better to buy or lease solar panels?”

When settling on a solar lease or buy, gather information such as: if I make a purchase, will it impact my financial investment? Is it better to buy or lease solar panels? Which of the two saves energy the most, and which is a better long-term investment? Set your worries aside as we have gathered all you need to know about purchasing or leasing solar panels, their key differences, and takeaways.

However, regardless of the type of solar panel adjustment you choose, the decision to switch to solar energy is a smart one!

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How Is Leasing a Solar Panel Different From Buying It? – A Brief Overview

If you lease solar panels, you don’t have ownership over them as you have agreed to the terms of conditions with the company that installs and maintains them on your roof. However, in this case, you will have to pay a monthly fee based on the amount of solar energy produced. This cost might lead to financial savings as it is usually lower than a regular electricity bill.

However, if you purchase solar panels through financing options or pay upfront, you completely own the system. This ownership lets you enjoy all the benefits of installing solar renewable energy, such as increasing property value, financial saving for the long term, tax credits, and government incentives.

How to Purchase a Solar Panel – Cash, Loan, or Combo

You can purchase solar power by providing cash upfront or raising a loan.

Own it Through Cash Upfront

Purchasing solar power by paying all the cash upfront is the simplest way to take complete ownership. It also presents different opportunities to avoid interest rates and lease payments.

Another good thing about purchasing solar panels with cash is that some installment companies offer great discounts to increase your savings. When you purchase solar panels with cash, your payment will start from a deposit (down payment) depending upon the value and number of panels required and design approval for the final system; the balance is also used for the material deposit used during the installation and building inspection to meet government criteria.

Once you claim your tax credit, the federal solar tax will be charged to your payment, leaving you with a lesser amount.

Purchasing Through Loan Put-Ups

You can also purchase solar panels by getting a loan on your investment. However, if you want to qualify for the loan application, you must meet certain criteria, such as the property should be your primary residence, only the property owner gets the solar loans, a credit score of a minimum of 650 maintained, and a debt-to-income ratio falling within the range of 50%.

Solar loans can be returned for as long as twenty years, which gives you time to decide on the repayment amount based on your monthly income.

Combo Loan Purchase

Homeowners usually choose combo loans for a solar lease or buy as they give them an optimistic approach to claiming 30% tax liability in the following year of the solar power installment. A combo loan consists of two loans: primary and bridge. The primary loan handles the total cost of installing solar power at your property, and the bridge loan is responsible for the tax credit values.

If you borrow a combo, you can repay the bridge loan in approximately 18 months, meaning you have ample time to claim and collect the tax credits. However, upon failure to repay the bridge loan, it will be raised monthly as part of your primary loan.

What Are Re-Amortizing Loans?

Homeowners who do not wish to collect their tax liability quicker can opt for re-amortizing loans. These loans are similar to primary loans; however, the borrowed amount is based on the total cost of solar power. They require a higher upfront payment, but the key takeaway is that you can re-amortize or refinance the payment, changing it to a lesser or more affordable monthly repayment.

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From An Investment Insight – Is It Better to Buy or Lease Solar Panels?

The decision to a solar lease or buy depends solely on your long-term investment goals and, of course, your financial condition. A lease is better when you prefer low and expected monthly payments and want to avoid hefty maintenance responsibilities; however, looking at it from an investment perspective, you might keep paying the lease provider for a long time. The leasing company will be responsible for routine repairs and investments, and you will get lower monthly electricity bills due to the solar installation. It provides limited financial benefits and makes you non-eligible for tax credits or government incentives.

On the other hand, purchasing solar panels is beneficial if you want to invest long-term and increase the property’s value through solar lease or buy. You might pay a good amount of money upfront, but you can enjoy the fruit of the investment in the future as you will have full ownership of the system. It is a good investment because it makes your property eligible for government incentives and tax credits, reducing investment costs!

To Sum It Up

When considering a solar lease or buy, it all comes down to your financial situation and the property’s condition. Even if you have all the resources, you should rethink if it is better to solar lease or buy. With all the information you need to know regarding long-term investment benefits, tax credits, government incentives, and payment methods, you can surely make an informed decision. Skip the maintenance responsibilities and gain the chance to save up monthly by leasing solar energy or increase your property’s value with a one-time investment by purchasing solar panels. Explore your options and switch to an environmentally sustainable energy today!