Most homeowners hear about solar from a salesperson, not a contract. By the time the paperwork arrives, it can be hard to tell whether you are leasing panels, buying the power they make, or taking out a loan. Those differences matter, because they decide who owns the system, what you pay each month, and what your options are if you want out.
The short answer
There are four common ways to pay for residential solar: a lease, a power purchase agreement (PPA), a solar loan, and a cash purchase. With a lease or PPA, a solar company owns the equipment on your roof. With a loan or cash purchase, you own it.
How a solar lease works
With a lease, you pay a set monthly amount to use the solar equipment. The payment does not depend on how much electricity the panels produce. Many leases run 20 to 25 years.
- The leasing company owns and usually maintains the system.
- Payments often rise each year through an escalator, commonly somewhere between 0% and 3.9%.
- Selling your home usually means the buyer must qualify for and take over the lease, or you pay it off.
How a power purchase agreement (PPA) works
A PPA is similar to a lease, except you pay for the electricity the system produces, usually at a set rate per kilowatt-hour. Your bill goes up in sunny months and down in cloudy ones.
Like leases, PPAs are typically long-term and often include a yearly rate increase. The company owns the equipment, and transfer or buyout terms apply if you sell the house.
How a solar loan works
With a solar loan, you borrow money to buy the system and own it from day one. Your payment depends on the loan amount, interest rate, and term, and it does not change with how much power the panels produce.
- Some loans include dealer fees that are built into the price rather than shown separately.
- Some loans assume you will make a large extra payment at a set point, often timed to an expected tax credit. If you do not make it, the monthly payment can go up.
- Many solar loans are secured by a lien or fixture filing on the property, which matters when you sell or refinance.
How a cash purchase works
Paying cash means you own the system outright with no monthly payment. There is nothing to cancel after installation, but your purchase contract still includes warranty, performance, and workmanship terms worth reading.
Side-by-side comparison
| Lease | PPA | Loan | Cash | |
|---|---|---|---|---|
| Who owns the system | Company | Company | You | You |
| What you pay | Fixed monthly amount | Per kWh produced | Loan payment | Upfront price |
| Yearly increases | Often | Often | No | No |
| Selling your home | Transfer or buyout | Transfer or buyout | Payoff or lien release | Included in sale |
What this means if you want out
Your options depend mostly on which of these you signed and when. Every state gives some protection for sales made at your home, and some states add solar-specific rules. After those windows close, leases and PPAs usually offer transfer or buyout options, while loans can generally be paid off early.
The fastest way to know where you stand is to look at the agreement itself. If you are not sure what you signed, call us at (520) 686-7921 for a free, no-obligation review.
Frequently asked questions
Is a lease or a PPA better?
Neither is better in every case. A lease gives a predictable payment. A PPA ties your cost to production. The escalator and the term usually matter more than the label.
Can I switch from a lease to owning the system?
Many leases and PPAs include a buyout option at set points during the term. The price and timing are spelled out in the agreement.
