Going solar is one of the best decisions you can make; not only because it will save you money but because it will improve your quality of life for decades to come.
Unfortunately, there is a huge obstacle for many people interested in solar panels.
The cost.
In 2025, a 7KW solar system costs a bit more than $20,000 (before the 30% federal investment tax credit). For those who can’t afford to shell out that kind of cash, this number may sound a tad intimidating (understandably). However, there are various options out there that eliminate this financial barrier to entry and make your dream of going solar a reality.
In this article, we will explore five different financing options. If you are curious about the different ways to pay for your solar system, read on for the different financing options available and the pros and cons that come with each.
Cash Payment
Paying for your solar system in cash is the most cost-effective option for you. It’s quick, simple, and it allows you to own your system right from the start. When you pay for your solar system in cash upfront, you immediately own your system, making you eligible for tax credits and other financial incentives. Overtime, this option also helps you gain maximum value from your system in a shorter amount of time since you won’t have to worry about additional payments and fees.
Pros:
- It provides the best return on investment: Your system shields you from unpredictable electricity rate hikes. As grid electricity prices increase, you’ll save more since you’ll now rely more on your solar system for your energy needs. With no interest or financing fees, you benefit from a shorter payback period for your system. Moreover, your panels and inverter are warrantied for up to 25 years.
- Your home’s value will increase: According to SolarReviews, homes with solar panels sell for about 6.9% more than homes with no panels. Also, potential buyers don’t want to take over a lease or loan. So having a system that has been fully paid for in cash signals to them that it’s a fully owned system, making your property even more attractive to them.
- Your savings potential increases: Owning your system from the jump instantly makes you eligible for tax credits and financial incentives (like net metering or SRECs). These will help reduce your installation costs, streamlining the process so you can start saving with your panels ASAP.
Cons:
- This is a high initial investment: It costs tens of thousands of dollars to go solar in 2025. Coming up with that kind of cash is a challenge and could deter people interested in going solar since they could spend that money on other things (ex: savings funds or personal investments).
Solar Loans
A solar loan is a flexible option if you want to own your solar system right away but simply can’t afford to pay for it in cash. With a loan, your initial costs are very small (or even zero in some cases) but you’ll need to keep up with your monthly payments.
You have two options for your solar loan: secured and unsecured. A secured loan gives you a lower interest rate but requires you to put up collateral like your house for example. This is a risk because if you can’t keep up with your payments, your house could be on the line. On the other hand, an unsecured loan doesn’t require any collateral but imposes a higher interest rate. That’s why it’s crucial that you properly evaluate your options to make the best choice. If you’d like more information on solar loans, we partner with Sunstone for our commercial customers and recommend Lightstream to our good credit, residential customers since they have no dealer, origination, or early pay off fees.
Pros:
- You own your system: Even though you are responsible for monthly payments to your lender, you are still the owner of your solar system. This means you qualify for credits and financial incentives and you get to benefit from a value boost to your home thanks to your solar panels.
- Some loans offer early payoff options: Many loan options are flexible and give you early payoff options, with no catch! This increases your return on investment from your solar system.
Cons:
- You need to have good credit: Before applying for a solar loan, make sure your credit history is in check. This will give you access to better loan terms, a better interest rate, and therefore, better savings overtime.
- Your interest payments technically make this option more expensive: This is because you are paying back what you borrowed plus interest charged by your lender. In addition, the higher your rate is, the more you’ll have to pay every month. It’s important to search for the best lenders and rates to maximize your savings.
- You commit to monthly loan payments: Even though you own your system outright, you are still responsible for monthly payments to your lender (as with any other type of loan!).
Personal Loans
A personal loan counts as an unsecured loan and just like a regular solar loan. It allows you to own your system right away and instantly makes you eligible for financial incentives. You could also use the loan for other solar-related expenses, outside of installation costs.
Pros:
- You own your system from the start: Getting immediate ownership of your solar panels helps you qualify for financial incentives (like state credits or the 30% federal tax credit before it expires December 31, 2025) to maximize the ROI from your panels.
- No collateral required: You don’t have to put up your home as collateral so it won’t be at risk if you struggle to make payments for your loan.
Cons:
- They often come with high rates: Since you don’t need to put up your house as collateral, you’ll likely have to pay a higher interest rate. Although, if you have good credit and minimal debt, you could qualify for a lower rate.
- You might be subject to additional fees: You may have to pay an origination fee as well as other fees for missed payments or as determined by your loan provider.
Solar Leasing
A solar lease is a long-term financing agreement between a homeowner and a solar service company. Under a lease, the solar company fully owns the solar panels while the homeowner leases them for a fixed monthly price. Any stress from installation or maintenance that might be needed for the solar system falls solely on the company that owns the panels.
With a lease, you have a monthly fee regardless of how much electricity your panels produce, so some months, your fee could be a lot higher than the value of the electricity your system produces. In other words, you could end up paying more for your lease in those months, than what you’d actually save on your electric bill (especially if you consume less energy or your system underperforms).
Pros:
- You are not responsible for maintenance of the panels: No need to worry about maintenance costs as the solar company that owns the panels will be responsible for that.
- There are minimal or no upfront costs: You are only responsible for your monthly payment fee (under a lease) or the amount from the electricity produced by your panels within that period (under a PPA).
- You benefit from immediate energy savings: Since you have no upfront or maintenance costs and your monthly fee will usually be lower than your utility bill, you immediately start saving as soon as your system starts working.
Cons:
- The solar provider owns the system not you: This means you won’t qualify for any tax credits or incentives (these can help you maximize your long-term savings).
- You must continue your payments even if you move: You must continue paying for the system as per your agreement with the solar company – even if you decide you want to move. This may be a problem down the line if you want to sell your home as potential buyers might be turned off by the idea of taking over your lease payments.
- You save a little less: With a lease or PPA, your savings are slightly lower than they would be with a cash payment or loan, since you don’t qualify for any financial incentive. Also, if your agreement includes an escalator clause (meaning your monthly fee could increase by a specific percentage overtime), your savings potential could be compromised even more.
Power Purchase Agreement
This is a slightly different version of a solar lease. A power purchase agreement (PPA) is similar to a lease in that it also involves an agreement between the homeowner and a solar company. They also share benefits regarding immediate savings and no maintenance responsibility for you the customer. However with a PPA, instead of paying a fixed monthly fee, you pay for each kilowatt-hour of electricity your system generates. A PPA also provides more stable savings since you only pay for the solar energy your panels produce.
Pros
- You start saving immediately: Since there are typically no upfront costs, you can start saving immediately. You also don’t have to worry about repayment or a payback period since the solar company owns the panels, not you.
- It “locks” in fixed electric costs: With a PPA, you pay for each kWh produced by your solar panels at a predetermined rate for the duration of your agreement (unless your contract includes an escalator clause). This protects you from bearing the weight of future electricity rate hikes.
Cons
- You don’t own your system: This makes you ineligible for tax credits or major financial incentives. You also can’t add battery storage to your system unless your PPA agreement clearly allows it (so make sure to properly review the terms before signing up).
- Your monthly payments can fluctuate: Since you are billed for each kWh your panels produce, your monthly payments will vary and could be much higher some months (whereas under a lease, you pay a fixed amount every month).
Going solar isn’t cheap but there are financing options to help you make it work. Ultimately, the choice depends on you and what works best for your situation. If you are ready to go solar now or just need help with a few questions about financing, reach out to us and our team will work with you every step of the way!
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Written By Alfreda Adote | Edited By Lauren McGregor