# Cash, loan, lease or PPA: the four ways to pay for solar URL: https://solarrealcost.com/does-solar-pay/cash-loan-lease-or-ppa-explained Updated: 2026-09-18 Review: Reviewed by SolarRealCost Editorial Team, editorial review: primary sources checked and independently fact-checked The same array costs very different amounts depending on how you pay. Dealer fees, escalators, who owns the system, and what happens when you sell. The same array can cost wildly different totals depending on how you pay for it, and the differences are usually buried. Four structures, four sets of questions. - **Cash** almost always costs least in total. - **Loans** commonly carry a **dealer fee folded into the price** — ask for it as a dollar number. - **Leases and PPAs** usually carry an **annual escalator**; compare the 25-year total, not year one. - **Who owns the system** decides who gets any tax benefit and what happens at sale. - Get **transfer terms in writing** before you sign anything with a 20-to-25-year term. ## Cash You own it, you keep whatever it saves, and the total is the lowest of the four. The trade-off is the capital and what else it could have done. ## Loan You own it and pay over time. The thing to ask about is the **dealer fee**: lenders commonly charge the installer a fee for offering a low advertised rate, and that fee is typically built into the price rather than disclosed as a charge. It is why the same array can have a "cash price" and a "financed price" thousands apart. The [CFPB has reported on solar lending practices](https://www.consumerfinance.gov/data-research/research-reports/issue-spotlight-solar-financing/) and it is worth reading before signing. Ask directly: *what is the dealer or origination fee as a dollar number, and what is the price without financing?* Tool: [Cash, loan, lease or PPA](https://solarrealcost.com/does-solar-pay/tools/cash-loan-lease-or-ppa). The same system four ways over 25 years — escalators, dealer fees, who owns the tax benefit, and what happens when you sell. ## Lease You rent the hardware for a fixed monthly payment, usually with an annual escalator. The provider owns the system and handles maintenance. You are not buying an asset, and at the end of the term there are options to negotiate. ## PPA You buy the electricity the system produces at an agreed rate per kilowatt-hour, again usually with an escalator. Similar ownership position to a lease, different billing mechanism. **The escalator is the number to check** At around 3% a year, what you pay in year 25 is roughly double year one. A monthly payment that looks attractive today is not the comparison; the total over the term is. Ask for it as a single number. ## What happens when you sell A lease or PPA has to be dealt with at sale, and the buyer's lender will ask about it. Terms that are not written down now become someone else's condition of sale later. Get the transfer terms in writing before you sign — the [Department of Energy's homeowner guide](https://www.energy.gov/eere/solar/homeowners-guide-going-solar) flags this as one of the main things to settle in advance. On resale value itself, see [does solar increase home value](https://solarrealcost.com/does-solar-pay/does-solar-increase-home-value) for what studies found for owned and leased systems. ## And the credit The provider on a lease or PPA may claim a federal credit you cannot, because it owns the equipment — see [what happened to the federal solar credit](https://solarrealcost.com/does-solar-pay/what-happened-to-the-federal-solar-credit). That should show up as a better price rather than as a reason to choose the structure. ## Bottom line Get the dealer fee as a number, the escalator as a number, and the 25-year total for every structure. Then compare — the price context is in [what solar costs to install](https://solarrealcost.com/does-solar-pay/install-solar-panels-cost). Start the Solar Check: https://solarrealcost.com/check ## Common questions ### What is a solar dealer fee? A fee the lender charges the installer, commonly folded into the cash price rather than shown as a charge. It is why a financed price and a cash price can differ by thousands for the same array. ### What is an escalator? An annual increase written into a lease or PPA, often around 2 to 3 percent. Over twenty-five years it compounds substantially, so compare the term total rather than the first-year payment. ### Who owns the system on a lease or PPA? The provider. That decides who can claim any remaining tax benefit and what has to be dealt with when you sell the house. ### Which is cheapest? Cash almost always costs least in total. Whether it is the right choice depends on what else that money could do and whether you have it. ## Sources - [IRS: Residential Clean Energy Credit — not available for property placed in service after 31 December 2025](https://www.irs.gov/credits-deductions/residential-clean-energy-credit) - [U.S. Department of Energy: Homeowner's guide to going solar](https://www.energy.gov/eere/solar/homeowners-guide-going-solar) - [CFPB: Issue Spotlight on solar financing (August 2024)](https://www.consumerfinance.gov/data-research/research-reports/issue-spotlight-solar-financing/) - [FTC consumer advice: How to avoid a home improvement scam](https://consumer.ftc.gov/articles/how-avoid-home-improvement-scam) - [DSIRE: Database of State Incentives for Renewables and Efficiency](https://www.dsireusa.org/)