You do not need cash up front to go solar, but how you pay dramatically changes how much you save and whether you get the tax credit. There are four routes: cash, a solar loan, a lease, or a power purchase agreement (PPA). Here is the honest comparison.
The Four Options at a Glance
| Option | Up-front cost | Who owns it | Federal credit in 2026? | Lifetime savings |
|---|---|---|---|---|
| Cash | Full | You | None | Highest |
| Solar loan | $0 to low | You | None | High |
| Lease | $0 to low | Company | Owner claims 48E | Lower |
| PPA | $0 | Company | Owner claims 48E | Lowest |
Cash: Best Long-Term Savings
No interest, full ownership, and you keep 100% of the savings. Best return if you have the funds. Downside: the largest up-front outlay.
Solar Loan: Own It Without the Cash
A solar loan lets you own the system while spreading the cost into monthly payments often similar to or lower than your old electric bill. For most homeowners who do not pay cash, a loan is the best balance.
Lease: Lower Savings, Less Hassle
You pay a fixed monthly amount to use panels the company owns. Little or no up-front cost, but you do not own the system and total savings are smaller. Since the residential credit expired, the owner's Section 48E credit is the only federal money left in residential solar - a good lease should pass part of it back in your rate, so ask to see where.
PPA: Pay Per Kilowatt-Hour
Similar to a lease, but you buy the solar electricity at a set per-kWh rate, usually below the utility rate. No up-front cost, no ownership, smallest savings.
Which Should You Choose?
- Have the cash? Pay cash for the best return.
- Want ownership with no big up-front cost? A solar loan is usually best.
- Want zero hassle or no money up front? A lease or PPA lowers up-front cost at the expense of savings.
Get free quotes with financing options →
FAQ
Do I get a federal tax credit with a lease or PPA?
Not directly - and since 31 December 2025, owners do not get one either. The Section 25D residential credit expired. Under a lease or PPA the third-party owner claims the Section 48E commercial credit (through the end of 2027) and may pass part of it back to you as a lower rate.
Is a solar loan worth it with interest?
Usually yes on lifetime savings, because you own the system and keep every kilowatt-hour it produces. With the federal credit gone the gap is narrower than it was, so price both.
Can I pay off a solar loan early?
Most solar loans allow early payoff. Check the terms in your quote.
Related
General 2026 guidance, not financial advice. Compare real terms before signing.