Solar Lease vs Loan vs Cash in 2026: Real Math After 25 Years
Side-by-side 25-year total cost comparison for the same 8kW solar system financed three different ways. Spoiler: lease costs nearly 3x cash.
A homeowner asked me last week: "Should I lease, loan, or pay cash for solar?" The answer is almost always the same, but most homeowners don't see the full math until it's too late. Here it is.
We'll use the same Florida 8kW system for all three scenarios. Fair market install cost: $22,400.
## Option 1: Cash purchase
- **Sticker price:** $22,400
- **30% federal tax credit:** -$6,720
- **Net cost after tax credit:** $15,680
- **Monthly equivalent over 25 years:** $52/mo
- **25-year total:** $15,680 (you're done after year 1)
- **Ongoing maintenance:** ~$100/year
- **Lifetime utility savings:** ~$78,000 (assumes $150/mo bill replaced + 4% annual rate hike)
- **Net 25-year benefit:** $78,000 - $15,680 = **+$62,320**
Cash is the cheapest path by a mile. The catch: $15,680 of liquidity upfront after the tax credit.
## Option 2: 25-year loan at 7.99% APR
- **Sticker price:** $22,400
- **30% tax credit:** -$6,720 (applied to year-1 principal)
- **Loan amount after credit:** $15,680
- **Monthly payment over 25 years at 7.99%:** $121/mo
- **25-year total payments:** $36,300
- **Lifetime utility savings:** ~$78,000
- **Net 25-year benefit:** $78,000 - $36,300 = **+$41,700**
Loan is still profitable, but you pay $20,620 in interest over 25 years. Lower-APR loans (5.99%) cut that interest cost roughly in half.
## Option 3: 25-year lease with 2.9% escalator
- **No upfront cost** (the appeal)
- **No tax credit** (the lease company gets it, not you)
- **Year 1 monthly:** $145/mo
- **Year 25 monthly:** $295/mo (compounds at 2.9% annually)
- **25-year total payments:** $58,200
- **Lifetime utility savings:** ~$78,000
- **Net 25-year benefit:** $78,000 - $58,200 = **+$19,800**
Lease "saves" you over your utility bill, but you keep only $19,800 of the value the system produces over 25 years. The lease company keeps the other $40,000+.
## Bottom line
| Option | 25-yr cost | 25-yr net benefit | $$ kept vs cash |
|---|---|---|---|
| Cash | $15,680 | +$62,320 | — |
| Loan 7.99% | $36,300 | +$41,700 | -$20,620 |
| Lease 2.9% esc | $58,200 | +$19,800 | -$42,520 |
A 25-year lease costs you $42,520 more than buying the same system in cash. Even after factoring the cost of capital (i.e. what your $15,680 cash could have earned in the stock market at 7% — about $35,000 over 25 years), cash still wins.
## When lease is the right call
1. **Bad credit.** If you can't qualify for a loan and don't have cash, the lease is solar or no solar. Take the lease.
2. **Renting your house to someone in the next 5 years.** Don't buy a 25-year asset.
3. **Lease with 0% escalator AND a fair-market starting payment.** Sunrun and a few others offer this — it's much better than 2.9% escalator. Still costs more than cash long-term but the gap closes considerably.
## What I'd do
If you can pay cash, pay cash. Use the tax credit. Skip the lease pitch entirely.
If you need financing, take a 10-15 year loan with the lowest APR you can find (credit unions usually beat solar-specific lenders). Pay it off as fast as you can.
If you're being pitched a lease, send me the contract first — there are 4 specific clauses I always check that determine whether the lease is fair or predatory.
Upload the contract at [solarfying.com/review](https://solarfying.com/review). Free, no obligation.
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