Leasing vs Buying Solar Panels: What to Consider
When homeowners consider going solar, one of the first questions they ask is whether they should lease or buy their system. The option you choose affects savings, incentives, ownership rights, and long-term value, so there’s a lot to consider.
In this guide, we’ll break down leasing vs buying solar panels so Missouri homeowners can make a confident, informed choice. If you’re new to solar, start with our Household Solar Power Guide to understand how solar works before comparing financing options.
Key Takeaways:
- Buying Solar Panels: Full ownership, maximize lifetime savings, claim federal tax credits, build home equity.
- Leasing Solar Panels: Low/zero upfront cost, third-party ownership, limited savings, no tax credits or home equity.
What Does It Mean to Lease vs Buy Solar Panels?
Before comparing costs, it’s important to understand the difference in ownership.
What Is Solar Leasing?
When you lease solar panels:
- A third-party company owns the system
- The system is installed on your roof at little or no upfront cost
- You make fixed monthly payments or pay for the power generated through a power purchase agreement (PPA)
- The provider typically handles maintenance and monitoring
A lease can lower your immediate costs. You avoid a large upfront investment, but you do not own the equipment.
What Does It Mean to Buy Solar Panels?
When you buy solar panels:
- You own the system outright
- You can pay cash or finance through a solar loan
- You qualify for available tax credits and incentives
- You’re responsible for ownership, though warranties cover most equipment
Ownership shifts more responsibility to you, but it also opens the door to greater long-term savings.
If you’re evaluating ownership, the Federal Trade Commission offers helpful guidance for consumers considering solar.
Upfront Costs and Monthly Payments
The financial structure of leasing vs buying solar panels looks very different.
Upfront Costs When Buying
Purchasing solar involves:
- Equipment costs
- Installation labor
- Permitting and electrical integration
If paying cash isn’t ideal, many homeowners choose solar financing. Solar loans allow you to:
- Spread payments over five to 25 years
- Own the system from day one
- Qualify for tax credits and incentives
- Potentially structure payments similar to your current electric bill
There are typically two types of loans. Secured loans, such as home equity loans or HELOCs, often offer lower interest rates because they use your home as collateral. Unsecured solar loans do not require home equity but may carry slightly higher interest rates.
Some lenders also offer promotional periods, such as low introductory rates or deferred payments. It’s important to review loan terms carefully, including:
- Interest rate (fixed vs variable)
- Dealer fees built into the loan
- Prepayment penalties
- Whether payments increase after an introductory period
A properly structured loan can allow you to replace most of your utility bill with a solar payment while building equity in your system. Once the loan is paid off, the electricity your system produces becomes significantly more cost-effective.
Costs When Leasing
Leasing usually offers:
- Low or zero upfront cost
- Fixed monthly lease payments or per-kWh payments
- Potential annual payment escalators
It’s important to know that an escalator increases your payment each year. A low starting payment may grow significantly over 20 to 25 years.
While leasing may make it easier to initially afford solar, lower upfront cost does not always mean lower total cost.
Incentives and Tax Credits: Who Gets Them?
This is one of the biggest differences in leasing vs buying solar panels.
When you buy, you may qualify for:
- The federal Residential Clean Energy Credit
- Potential local or utility rebates
- Net metering participation benefits
Details on the federal tax credit are available directly from the IRS Residential Clean Energy Credit page.
When you lease, the leasing company typically claims the tax credit because they own the system. Those savings may or may not be reflected in your lease pricing.
Long-Term Savings: Lease vs Buy
Short-term affordability and long-term wealth building are two different things.
Lifetime Savings When Buying
When you purchase solar panels:
- You can offset a significant portion of your electric bill
- Your payback period may range from several years depending on usage
- Once paid off, your system continues generating low-cost power
After your loan is paid, the electricity your panels generate is essentially yours. Rising utility rates increase the value of that energy over time.
Ownership also means you benefit from every kilowatt your system produces.
Savings Limitations with Leasing
With leasing:
- You continue making payments for the life of the agreement
- Lifetime savings are generally lower
- You build no equity in the system
You may still reduce your electric bill, but your overall return is capped compared to ownership. And remember that electric rates continue to rise.
Home Value and Selling Considerations
Solar can affect resale value. How it does depends on ownership.
When you own your system:
- It can increase home value
- Buyers appreciate lower utility costs
- There is no third-party contract to transfer
When you lease:
- The lease may need to be transferred to the buyer
- The buyer must qualify under the leasing company’s terms
- Some buyers hesitate to assume long-term contracts
Leases are transferable in many cases, but the process can complicate a sale.
Maintenance, Repairs and Responsibility
Responsibility differs significantly between leasing and buying.
With a lease:
- The provider typically handles monitoring and maintenance
- Repairs may be included in the agreement
When you buy:
- Equipment warranties cover panels and inverters
- Workmanship warranties protect installation
- Monitoring systems allow you to track performance
- Solar panels are built to last 25 years or more. Long-term reliability is strong, but understanding warranty coverage is critical either way.
When Leasing Might Make Sense
Leasing may be the right fit in certain situations. It may work for homeowners who:
- Have limited upfront capital
- Cannot use tax credits
- Prefer predictable payments
- Plan shorter-term homeownership
For some households, access to solar with minimal initial cost outweighs reduced long-term savings.
When Buying Solar Panels Is Often the Better Investment
Buying typically makes sense for homeowners who:
- Plan to stay in their home long term
- Have higher electricity usage
- Qualify for tax incentives
- Want to maximize return on investment
Ownership turns solar into an asset. Over time, that asset can produce meaningful financial benefits.
Leasing vs Buying Solar Panels in Missouri
In states with very high electricity rates, solar systems can reach payback in a relatively short period because each kilowatt-hour offset is worth more. But in states like Missouri, where rates are generally lower, the savings per kilowatt-hour are smaller. That can extend the payback period.
For many Missouri homeowners, payback may range from approximately eight to 12 years depending on system size, energy usage, available incentives and financing structure.
Factors to consider locally include:
- Utility rate structures
- Net metering policies
- Available incentives
- Roof condition and orientation
Because Missouri does not have the same state-level incentives as some coastal markets, system design and financing structure matter even more. A properly sized system paired with the right loan terms can dramatically change long-term returns. That’s why local evaluation is critical instead of relying on national averages.
A professional evaluation can help determine which path aligns with your financial goals.
How Brda Electric Helps You Choose the Right Option
Our team of local experts serves residential and commercial customers across St. Louis and surrounding counties.
Brda believes that homeowners deserve clarity. So you can expect:
- Honest cost comparisons
- Clear savings projections
- Transparent discussion of ownership vs leasing
- Professional installation when purchasing
The decision to lease vs buying solar panels depends on several personal factors, including your timeline, budget and long-term plans. Brda is here to help you evaluate both paths so you can move forward with confidence.