Advantages of Paying Cash for Solar Systems
With solar energy cheaper than ever, plenty of homeowners are considering adding solar panels to their homes. However, solar systems can still be costly for many homeowners. For those who want to add solar panels to their house, it begs the question: should you lease the solar panels over a set period of time, or pay the cash upfront and own them once they’re installed?
Leasing a Solar System
Solar system leasing is comparable to leasing a car. The important thing to know about leasing is that you’ll be locking into a rate you pay each month for up to 20 years, but you won’t need to pay anything upfront. Whichever solar installation company you choose will be in charge of maintenance and repairs if necessary. Some offer fixed rates, while other contract rates may rise on an annual basis. No matter what, you’ll still see savings on your energy bill compared to the current way you consume electricity. But how do you see savings right now while it’s being installed? The fully pre-paid lease is one way to save. By paying upfront at a lower cost, you don’t have to deal with maintaining or repairing solar panels.
Buying a Solar System
If you can afford it now, purchasing the panels outright with a home equity loan will maximize the savings. You’ll get other financial benefits from buying outright, like rebates and tax credits, that you get to apply to the system. In the long run, it’s cheaper than leasing. You get the best price, and have the advantage of earning tax breaks from your city or state. In fact, depending on where you live, you could get city, county, state and federal incentives, which adds up to a lot of savings.
Moreover, owning the panels outright adds value to your home. But leases mean you need the next homeowner to take over the lease as well. According to Bloomberg, many homebuyers may not realize what it means to sign a solar lease — they may not understand the savings they’ll earn.
So Which to Choose?
If you don’t have the cash right now, leasing solar panels might be the way to go, as the company will install the panels and give you a discount on your current rate. You’ll also save plenty of money on your energy bill. But you need to consider what happens if you decide to sell your home.
For those with a little more, or who decide to get a loan, paying cash means better savings overall. Solar panel systems are extremely durable and don’t need to be serviced every year. Panels come with 20 to 25-year warranties as well, so if something does break, you should be covered. Plus, it’s a selling point instead of a miscommunication for anyone trying to buy your home.
The best thing to do is look into both options and examine several offers. Get multiple bids for solar panel installations, just like you would price several companies and contractor bids to install hardwood floors.
Have you considered paying cash or leasing a residential solar system?
Image credit: Gray Watson at Wikimedia under a Creative Commons license