Solar Lease vs Loan vs Cash in 2026: Real Math After 25 Years
Side-by-side 25-year total cost comparison for the same 8kW solar system financed three different ways. Spoiler: lease costs nearly 3x cash.
A homeowner asked me last week: "Should I lease, loan, or pay cash for solar?" The answer is almost always the same, but most homeowners don't see the full math until it's too late. Here it is.
We'll use the same Florida 8kW system for all three scenarios. Fair market install cost: $22,400.
Updated September 2026: the 30% federal residential credit (Section 25D) ended for every homeowner-owned system whose installation was completed after December 31, 2025 — however you pay for it — so the cash and loan scenarios below no longer subtract it. If a quote you're holding still does, read this first.
Option 1: Cash purchase
- Sticker price: $22,400
- Federal tax credit: $0 (ended for installs completed after Dec 31, 2025)
- Net cost: $22,400
- Monthly equivalent over 25 years: $75/mo
- 25-year total: $22,400 (you're done after year 1)
- Ongoing maintenance: ~$100/year
- Lifetime utility savings: ~$78,000 (assumes $150/mo bill replaced + 4% annual rate hike)
- Net 25-year benefit: $78,000 - $22,400 = +$55,600
Cash is the cheapest path by a mile. The catch: $22,400 of liquidity upfront.
Option 2: 25-year loan at 7.99% APR
- Sticker price: $22,400
- Federal tax credit: $0
- Loan amount: $22,400
- Monthly payment over 25 years at 7.99%: $173/mo
- 25-year total payments: ~$51,800
- Lifetime utility savings: ~$78,000
- Net 25-year benefit: $78,000 - $51,800 = +$26,200
Loan is still profitable, but you pay about $29,400 in interest over 25 years. A 5.99% loan cuts that to roughly $20,900; a 10–15 year term cuts it far more.
Option 3: 25-year lease with 2.9% escalator
- No upfront cost (the appeal)
- No tax credit for you — the lease company, as the system owner, may claim a commercial credit if its project qualifies, and it prices that into your rate
- Year 1 monthly: $145/mo
- Year 25 monthly: $295/mo (compounds at 2.9% annually)
- 25-year total payments: $58,200
- Lifetime utility savings: ~$78,000
- Net 25-year benefit: $78,000 - $58,200 = +$19,800
Lease "saves" you over your utility bill, but you keep only $19,800 of the value the system produces over 25 years. The lease company keeps the other $40,000+.
Bottom line
| Option | 25-yr cost | 25-yr net benefit | $$ kept vs cash |
|---|---|---|---|
| Cash | $22,400 | +$55,600 | — |
| Loan 7.99% | ~$51,800 | +$26,200 | -$29,400 |
| Lease 2.9% esc | $58,200 | +$19,800 | -$35,800 |
A 25-year lease costs you about $35,800 more than buying the same system in cash, and a 25-year loan at 7.99% costs about $29,400 more — which is why, if you finance, the term and APR matter more than anything else on the page.
When lease is the right call
- Bad credit. If you can't qualify for a loan and don't have cash, the lease is solar or no solar. Take the lease.
- Renting your house to someone in the next 5 years. Don't buy a 25-year asset.
- Lease with 0% escalator AND a fair-market starting payment. Sunrun and a few others offer this — it's much better than 2.9% escalator. Still costs more than cash long-term but the gap closes considerably.
What I'd do
If you can pay cash, pay cash. Skip the lease pitch entirely.
If you need financing, take a 10-15 year loan with the lowest APR you can find (credit unions usually beat solar-specific lenders). Pay it off as fast as you can.
If you're being pitched a lease, send me the contract first — there are 4 specific clauses I always check that determine whether the lease is fair or predatory.
Upload the contract at solarfying.com/review. Free, no obligation.
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