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Solar Financing: Reviewing Your Options To Pay for Solar Panels

Learn some of the most common solar financing options including cash, loans, home equity, PPAs, leases, solar tax rebates and incentives.

Most people agree that solar power is a more sustainable, cost-effective and often more reliable way of powering our homes. The barrier for many? Solar financing. 

But despite solar panels being an investment that calls for a little planning, their cost has decreased significantly over recent years. And frankly, they’re quite affordable thanks to monthly financing options. It’s no wonder that people are getting more interested in commercial and home solar installation.

Here, we’ll explore some of the most common ways to pay for solar, including the following solar panel financing options:

[Related: What To Know Before Installing Solar Panels]

Solar Panel Financing Options

The number of options you have to pay for solar might surprise you. While cash, loans and PPAs are the most common solar financing options, you shouldn’t overlook government incentives, cash-out refinance and home equity lines of credit (HELOC).


If you have cash savings you’re looking to invest, solar is a low-risk investment with high returns. Paying for solar panels in cash also enables you to seize serious benefits:

  • Reducing your monthly bills immediately
  • Saving thousands of dollars by avoiding the interest associated with other solar financing options
  • Taking advantage of federal and state rebates and incentives right away

Paying in cash is especially smart if you plan on remaining in your home long-term — the investment will continue paying off for years to come.

[Related: 10 Reasons Solar Should Be Every Homeowners’ Next Investment]

Bill Swapping

If you don’t have the cash to purchase solar panels outright, don’t worry. There are various options that enable you to pay your solar panels off over time.

These options are often referred to as a “bill swap” because you’re effectively swapping your electric bill for your solar financing payment.  

Of course, the two payments may not be exactly the same. But the idea is this: If you can afford to pay your energy bill, putting that money toward a monthly solar payment instead is that much more feasible. 

The added benefit of swapping your electricity bill for solar is that solar caps your monthly payment for the duration of your loan. It also provides a hedge against rising energy costs that would otherwise be unprotected by traditional energy bills.

Let’s take a look at some of your options for solar bill swapping.


Loans enable you to install and start using solar panels right away. Then, you pay them off over time with monthly payments (plus interest). 

Some loans require little — or even no — money down. Naturally, this makes solar panels practical for a much greater percentage of the population.

The downside of financing your solar installation with a loan is the added money you’ll spend in interest. Be sure to shop around to compare solar panel financing rates. And don’t forget that various loan types are available.

[Related: Considering Solar Loans? Here’s What To Know]

Home Equity

If your house has appreciated since you bought it, another option is to borrow against your home equity with a cash-out refinance or HELOC.

A cash-out refinance replaces your existing home loan with a larger mortgage. You then get the difference between your previous loan balance and your new loan amount, which you can put toward whatever you want — including solar panels.

Meanwhile, HELOCs let you use your home equity like you would a credit card. You can borrow as much as you need for your solar installation, and you won’t have to pay interest on any untapped funds. Just remember that you’ll likely have a variable interest rate, so your payment amount could change.

PPAs or Solar Leases

Some states let homeowners finance solar panels through solar leases or PPAs

Solar leases and PPAs work a lot like leasing a car. A third party will install and then own your solar panel system — no up-front costs required. You’ll then pay them for your energy each month.

The primary benefit of solar leases and PPAs is cost savings. You’ll save on your energy bill — typically between 10% and 30% — as well as maintenance. Because you don’t own the solar installation, you’re not responsible for any necessary servicing. 

What’s more, you’ll have the satisfaction of knowing you’re using a clean, alternative energy source.

Now for the drawbacks. 

While it’s true that you’ll pay less for your energy each month, those payments aren’t investments in a system you’ll eventually own outright. Like with traditional energy bills, you’re spending money you’ll never see again. And because you don’t own the system, you can’t take advantage of any rebates and incentives, either.

Finally, selling a home with leased solar panels might be tricky. The new buyer may not want the solar panels, and even if they do, ownership might not be transferable. If you end up having to remove your panels, you could face costly removal and lease termination fees.

[Related: 6 Things You Should Know About Leasing Solar Panels]

Tax Benefits and Rebates

Finally, a number of tax benefits and rebates are available to help lower the cost of your solar panels. And while these incentives won’t finance your installation completely, you’d be remiss to overlook them.

For example, the federal government offers a solar tax credit that allows homeowners to deduct 30% of their system’s cost from their income taxes. That’s no trifling amount. 

Additional federal incentives are available as well, and many states have local rebates and incentives. Be sure to explore your options! Take advantage of all that apply to you to maximize your savings.

Which Solar Financing Option Is Best?

When it comes down to it, the best solar panel financing option depends on your specific situation and needs. 

If you have the funds, paying for solar panels in cash sets you up for the most long-term savings. Loans, cash-out refinance and HELOCs are good options if you can’t pay up front. Just be sure to compare solar panel financing rates to get the best deal possible.

Finally, if you can’t afford to invest in solar right now but want to start taking advantage of alternative energy immediately, a solar lease or PPA might make the most sense if available in your state.

[Related: Are Solar Panels Worth It? What You Need To Know To Decide]

Explore Your Solar Financing Options With Freedom Solar

Looking for a little more guidance? At solar panel company Freedom Solar, we’re here to help you find the best way to finance your solar panels.

Together, we can create a finance plan that works best with your budget — whether that means paying outright or putting no money down. We also have a 25-year warranty plan to make solar panel ownership well worth your investment. 

Call us today at (800) 504-2337 or complete our consultation form. One of our energy consultants will be in touch!

Featured image via Pixabay