Converting to solar power has never been easier or more affordable. So if you’ve been considering the switch, now is a good time. But going solar can also be fraught with pitfalls, particularly when you’re deciding how to finance your solar system.
People lease because buying the system outright requires a lot of up-front costs. But by leasing, you miss out on any federal tax benefits and local incentives. Plus, people who lease save far less than those who buy their systems outright. In fact, one analysis shows you’ll save $40,000 over 20 years if you lease, but buy the system outright and you’ll save three times that, $60,000.
Also, many leasing contracts contain an escalator clause, which means your payments go up every year, further reducing your savings.
If you don’t want to pay for the panels outright, Consumer Reports says you are much better off financing the purchase than leasing.
If you do buy, expect to pay $15,000 to $20,000 after tax credits, and you’ll save 70 to 100 percent off your current electricity bill. Most systems pay for themselves in 5 to 7 years.
More advice on going solar here.