Taking a look at residential solar power systems, a lot has changed in the last decade. True, solar power systems have been around for decades, exorbitantly expensive being just one reason why there weren’t a lot of systems being installed.
Even five years ago, a 5 kW solar power system cost in the range of $40,000. Part of the problem with this expense was that they were insanely difficult to finance. Banks really had no idea what to do with them, and most simply refused. Even today, with prices for the same system bottoming on $15,000, most banks still don’t really understand how to secure or properly price loans.
On the other hand, solar power system leasing came along just in time to help residential owners take advantage of solar tax incentives and clean renewable energy for their homes. Big companies, like SolarCity or SunPower, could aggregate thousands of them into a single huge loan, something that the big banks could understand.
Still, with solar power system prices dropping, thanks to more-efficient and cheaper solar panels, some small banks are venturing into offering loans for them. Mostly, banks’ willingness to consider the possibility has to do with the costs, less than half that of even five years ago, as well as finally learning how to price and secure new solar systems. The question is, should you lease or borrow your way to a new solar power installation?
Of course, the answer is “It depends.” Mainly, the issue has to do with who owns the system when, or if, you decide to sell your home. While studies conclude that installed solar powers systems add upwards of $15,000 to the value of a home, they can be easier, or more difficult, to sell, depending on whether the system was leased or loaned. With a lease, the new owner could be saddled with the remnants of a 20-year lease, in addition to the mortgage, because the system is not part of the house. On the other hand, a solar power system financed by loan easily becomes part of the home and can be rolled into the mortgage.
If you have the income to offset tax benefits of installing a residential solar power system, or you are considering selling your home, then getting a loan makes the best financial sense. On the other hand, if your income is lower, and you have no plans to sell your home, $0-down lease deals could be the way to go.