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Purchasing v. Financing Solar Panels

Solar energy has become an increasingly popular way for homeowners to power their homes while reducing their carbon footprint. However, the decision of whether to purchase or finance solar panels is a tough one. Both options have their pros and cons, and ultimately the decision depends on your personal circumstances and priorities. In this blog post, explore the advantages and disadvantages of purchasing and financing solar panels.

Purchasing Solar Panels

When you purchase solar panels, you pay for them outright and own them outright. This means that you are responsible for any maintenance or repairs that are needed. Here are some advantages and disadvantages of purchasing solar panels:

Advantages to Purchasing Solar Panels

Immediate Savings: The upfront cost of purchasing solar panels is steep, but it also leads to significant savings in the long run. Once the panels are installed, your electricity bill is reduced, and you even generate excess power that’s sold back to the grid. You won't have to wait for the panels to be paid off like you would with financing.

Return on Investment: The cost of electricity is constantly rising, but with solar panels, you lock in a lower rate for the next 25 years or more. This results in a high return on investment as you save money on your energy bills. Since you are not paying interest on a loan, your return on investment is typically higher when you purchase solar panels outright.

Increased Home Value: Installing solar panels increases the value of your home, making it more attractive to potential buyers. 

No long-term commitment: When you purchase solar panels outright, you don't have to worry about making monthly payments for years to come. Once you pay for the panels, they are yours to own and use as you please.

Federal tax incentives: There are federal tax incentives available for homeowners who purchase solar panels outright. These incentives significantly reduce the cost of purchasing solar panels.

Disadvantages to Purchasing Solar Panels 

High Upfront Cost: One of the biggest disadvantages of paying for solar panels outright is the high upfront cost. For many homeowners, this cost may be prohibitive, and they may not have the cash on hand to pay for the panels upfront.

Maintenance and Repairs: When you own your solar panels, you are responsible for any maintenance or repairs that are needed. This adds to the overall cost of ownership.

Limited payment flexibility: Since you are paying for the panels upfront, you may not have as much payment flexibility as you would with financing options, which allow you to spread out payments over a longer period of time.

Uncertainty in future energy prices: While locking in a lower energy rate is a benefit of purchasing solar panels outright, it's impossible to predict future energy prices with certainty. There is a chance that energy prices could drop significantly, which would reduce the overall value of your investment in solar panels.

Financing Solar Panels

Financing solar panels allows you to spread out the cost over time and make payments on a monthly basis. Here are some advantages and disadvantages of financing solar panels:

Advantages to Financing Solar Panels

Low Upfront Cost: Financing allows you to get solar panels installed with little or no money down, making them more accessible to homeowners who may not have the cash on hand to purchase them outright.

Maintenance and Repairs: With a solar panel financing agreement, the maintenance and repair costs are typically covered under the agreement, so you won't have to worry about unexpected expenses.

Energy Savings: Even with the monthly payments on your financing agreement, you still save money on your energy bills. Even though you have to make monthly payments on your loan, you still start saving money on your energy bills immediately. This helps offset the cost of the loan.

Potential tax incentives: Depending on the financing option you choose, you may still be eligible for federal or state tax incentives, which further reduce the cost of your solar panels.

Professional installation and maintenance: When you finance your solar panels, the installation and maintenance are typically included in the financing agreement. This gives you peace of mind knowing that your panels are being installed and maintained by professionals.

Flexible payment options: Many financing options offer flexible payment options, such as longer loan terms or the ability to make additional payments without penalty. This makes it easier for homeowners to manage their finances while still investing in solar energy.


Interest Rates: Financing your solar panels means that you have to pay interest on the loan, which adds up over time.

Long-Term Commitment: Financing agreements typically last for 10-20 years, which means you are committed to making payments for a long time.

Limited Savings: Since you are paying interest on the loan, your overall savings on your energy bills may not be as high as if you had purchased the panels outright.

Interest charges: When you finance solar panels, you typically pay interest on the loan. This means you end up paying more for your solar panels over time than if you had paid for them outright.

Ownership restrictions: Depending on the financing option you choose, you may not own the solar panels outright until the loan is paid off. This limits your ability to make changes to the panels or the system as a whole.

Credit requirements: Some financing options may require a certain credit score or income level to qualify for the loan. This makes it difficult for some homeowners to finance solar panels.

Potential impact on home value: Depending on the financing option you choose, it could impact the value of your home if you decide to sell. Potential buyers may be hesitant to take on a solar panel loan, which could make it harder to sell your home.

Deciding to Finance or Purchase

In the end, the decision to purchase or finance solar panels depends on your individual circumstances and priorities. If you have the cash on hand and are looking for a high return on investment, purchasing solar panels outright may be the best option for you. However, if you are looking for a low upfront cost and want to spread out the payments over time, financing may be a better choice. Ultimately, both options lead to energy savings and a reduced carbon footprint, so it's up to you to decide which option is right for you.

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