Is it better to pay cash or finance solar?

Cash purchases have the highest ROI — you avoid interest costs and typically save $5,000–$15,000 more over 25 years versus a loan. However, solar loans with rates under 6–7% often make sense if you'd earn less in savings accounts. Leases and PPAs offer $0-down savings but significantly lower long-term value since you don't own the system.

What is the cheapest way to finance solar?

In order from cheapest to most expensive: (1) Cash purchase (no interest), (2) Home equity loan or HELOC (lowest interest rates, 5–8%), (3) Solar-specific loan (7–12% typical), (4) Dealer/installer financing (often 9–15%), (5) Lease or PPA (you give up ownership and long-term value). Always compare the total 25-year cost, not just monthly payments.

What is the best way to finance solar?

Cash purchase gives the best long-term ROI since you avoid interest entirely. A solar loan at a competitive rate (6–9% APR) still provides strong returns, especially compared to utility rate escalation. Solar leases and PPAs require no upfront cost but typically deliver the lowest long-term savings since the installer captures most of the economic benefit.

Does a solar loan affect my mortgage eligibility?

An unsecured solar loan (personal loan) may affect your debt-to-income ratio for mortgage qualification. A PACE (Property Assessed Clean Energy) loan attaches to your property and transfers to the new owner at sale. If you plan to sell your home or apply for a mortgage within 1–2 years of going solar, an unsecured loan may be preferable to PACE financing.

Solar Financing Comparison Calculator

Compare buying solar with cash, financing with a loan, and leasing side by side. See which option delivers the best 10-year net financial outcome for your specific situation.

System Cost ($)

Loan Rate (%)

Loan Term (yrs)

Lease Monthly ($)

Annual Savings ($/yr)

About This Calculator

The Solar Financing Comparison Calculator cuts through the confusion of competing solar offers by showing all three main financing structures — cash purchase, solar loan, and lease — on the same 10-year net benefit basis. Net benefit is defined as cumulative electricity savings minus total out-of-pocket cost for each option. This apples-to-apples comparison reveals which financing structure puts the most money back in your pocket over a decade, while also showing the trade-offs in upfront cost vs. long-term value.

Cash purchase almost always wins on a long-term net benefit basis because you pay no interest, claim the full federal tax credit, and own the asset outright. The trade-off is the largest upfront capital requirement. Solar loans win for homeowners who want ownership benefits (tax credit, equity) without the full upfront cost — but interest charges reduce net benefit compared to cash. Leases and PPAs minimize upfront cost and require no ownership responsibility, but typically deliver the lowest 10-year net benefit because lease payments eat into savings. The gap between cash and lease can be $8,000–$15,000 over 10 years on a typical residential system.

To get the most accurate comparison, enter the specific loan rate from actual lender quotes rather than using a generic rate. Loan rates vary significantly by lender, term, and credit score — getting multiple quotes from solar-specific lenders (GoodLeap, Mosaic, LightStream) and general lenders (credit unions, banks) is worth the effort. For the lease option, enter the actual monthly payment from the lease proposal you received. The PPA rate field allows comparison of a cents-per-kWh PPA offer against ownership options using your actual monthly consumption.

This calculator gives you a snapshot at 10 years, but the ownership advantage over a full 25-year system life is even larger. The cash and loan options both deliver fully paid-off systems generating free electricity from year 12 onward, while lease payments continue for the full 20–25 year term. Use the Solar Lease vs Buy Calculator for a full-term comparison after using this tool to narrow down your financing approach.

Calculations based on NREL solar modeling data and industry-standard assumptions, built and maintained by the independent SolarToolsOnline research team.

Estimates only — not financial, tax, or legal advice. Verify important results with a licensed solar installer or financial professional before making decisions.