Installing solar panels on your home has a number of benefits. Not only does it decrease your carbon footprint on the planet, but it can also have many positive effects on your wallet. Additionally, it can help to increase the value of your home depending on whether you decide to lease or buy your solar panels. Below are the pros and cons of leasing versus buying your solar panels so that you can make the best financial decision for you.
Buying
When you buy a solar panel system for your home, there are two main benefits. The first is that you own the system outright. You can pay for the system upfront or take out a solar loan in order to finance the system. The second benefit of buying is that you can claim a federal investment tax credit. This allows you to claim the system on your taxes yearly, which can in turn lessen the cost you pay for your solar panels over time. Another benefit of buying your solar panel system is that it increases the value of your home. One drawback to purchasing your own solar panel system is that you have to come up with a large some of cash or a loan upfront. Most solar loans require you have a decent credit score of a 640 or better as well as put initial money down to begin the loan. Solar panel systems, purchased outright, can cost anywhere between $15,000 to $30,000. Many solar installers offer incentives, but this is still a large sum of cash needed upfront. Another drawback to purchasing is that all of the maintenance and upkeep is your responsibility.
Leasing
Leasing solar panels for your home has its pros and cons as well. One of the benefits of leasing the solar panels is that most companies will require little to no down payment. Another benefit of leasing your solar panels is that you are not responsible for the repair, maintenance and regular upkeep of your system. This is all done by the company that you are leasing the panels through. The last benefit of leasing your solar panel system is that you can lock in a cost for your utility rate so that you pay the same amount month to month. One of the drawbacks of leasing versus buying your solar panel system is that you cannot claim the federal tax credit. Since you do not own the system, only the company who owns them can take advantage of this credit. Another drawback of leasing is that they will not raise the value of your home. When you move, the panels will be removed if the new owners do not wish to take over your current lease. It may even be difficult for you to move depending on the terms and conditions of your contract. Yet another drawback to leasing is that if you miss a payment, the company that owns the panels can just come and remove the panels from your property. At the end of the predetermined time period for the lease, you will then need to decide to purchase the system, lease the system for another period of time or have the system uninstalled.
PPA
Another available option you may have is a PPA. PPA stands for Power Purchase Agreement. PPA's vary from state to state and in some states are considered illegal. In order to go with this option make sure you check state laws and regulations. With this option you don't pay for the panels at all. You only pay for the power that the panels provide. The company you choose to install the solar panel system has the responsibility to upkeep, maintain and repair the system as needed. However, this means you have no ownership whatsoever over the panels and they can be removed at any time by the installer.
As you can see, there are both benefits and drawbacks to purchasing or leasing your own solar panel system. If your only concern is environmental impact and low upfront investment, than leasing is probably the right option for you. Do a great deal of research before adding a solar panel system to your home so that you can make the best informed decision that is right for you.
