How to Pay for Solar: Cash, Loan, Lease or PPA? A Plain-English Guide for Ohio, Kentucky and Indiana

Fall is when a lot of households start planning next year’s budget, and for homeowners thinking about solar, the biggest question usually isn’t “Will it work on my roof?” It’s “How do I pay for it?”

There are four main ways to pay for solar. Each one changes how much you save, who owns the system, and what happens if you sell your home. Here’s how they compare, plus the hidden costs regulators have warned about.

The Four Ways to Pay for Solar

1. Cash

You pay for the system upfront and own it from day one.

• Lowest total cost. No interest or financing fees.
• You own it, which matters for savings and for your home’s value. (More on that here.)
• The trade-off: a large upfront payment.

2. A Loan

You borrow to buy the system, then repay it over time. You still own the system. There are a few kinds:

• Solar loans arranged through the installer, often approved quickly at the kitchen table
• Home equity loans or lines of credit from your bank or credit union
• Personal or “green” loans from banks and credit unions

A loan can make solar affordable with little or nothing down. But this is also where the most expensive surprises hide (see below).

3. A Lease

A solar company owns the system on your roof, and you pay a fixed monthly amount to use it.

• Little or no upfront cost. The leasing company usually handles maintenance.
• You don’t own it. Your savings are the difference between your lease payment and what you would have paid the utility.
• Some leases include annual payment increases, called escalators. Know the number before you sign.
• Selling your home gets more complicated. The buyer has to qualify to take over the lease, or you may need to buy it out.

4. A Power Purchase Agreement (PPA)

Similar to a lease, except you pay for the electricity the system produces, at a set rate per kilowatt-hour, instead of a flat monthly fee. The pros and cons are much the same as a lease.

Quick Comparison

The Hidden Costs Regulators Warn About

In 2024, the Consumer Financial Protection Bureau (CFPB) studied solar lending and found problems homeowners should know about:

Dealer fees. Some solar loans include “dealer fees” built into the loan amount. The CFPB found these fees often add 30% or more to the loan compared with the cash price. They usually aren’t reflected in the advertised APR, so a “low-rate” loan can cost far more than it looks.

Payment jumps. Some solar loans are designed so that your monthly payment increases after a year or so, unless you make a large lump-sum payment toward the balance, often around 30%. Ohio’s Attorney General raised the same issue in a lawsuit we covered in July.

Overpromised savings. Be wary of any pitch that says solar will cover the loan payment and eliminate your electric bill.

How to Compare Offers the Right Way

Here’s what the CFPB recommends, along with what we tell our own customers:

1. Ask for the cash price, even if you plan to finance. That’s your baseline for spotting markups.
2. Ask whether the financed price is higher than the cash price, and by how much.
3. Get the full loan terms in writing: interest rate, term, total of all payments, and whether the payment can ever change.
4. Check other financing. A home equity loan or credit union loan may cost less than an installer-arranged solar loan. Compare the total cost, not just the monthly payment.
5. For leases and PPAs, ask about escalators, the total cost over the full term, and exactly what happens when you sell your home.
6. Get more than one proposal. Comparing two or three side by side is the best protection against overpaying.

Which Option Is Right for You?

• If you can pay cash or use low-cost financing, owning usually delivers the most savings over the 25-plus-year life of the system.
• If you want solar with little upfront cost, a loan with clear terms, or a carefully reviewed lease or PPA, can still make sense.
• If you might move in the next few years, think through how each option affects selling your home.

There’s no one right answer. The right answer is the one you fully understand before you sign.

Straight Answers on Financing

Icon Solar has helped homeowners across Ohio, Kentucky and Indiana go solar since 2009. We’ll show you the cash price and the financed price side by side, and walk you through the terms, so you can compare with confidence. Already have a quote from someone else? We’re happy to give you a second opinion.

Explore our solar financing options, learn how many solar panels your home may need, or request your free quote. You can also call us at (866) 396-4266.

Frequently Asked Questions

Is it better to buy or lease solar panels?

Buying, with cash or a loan, usually delivers the most long-term savings and adds the system to your home’s value. Leasing lowers upfront cost but typically saves less over time and can complicate selling your home.

What is a dealer fee on a solar loan?

It’s a fee built into the loan amount, often to make an advertised interest rate look lower. The CFPB found dealer fees often increase solar loan costs by 30% or more above the cash price, and they usually aren’t reflected in the APR.

What’s the difference between a solar lease and a PPA?

With both, a company owns the system on your roof. In a lease, you pay a set monthly amount. In a PPA, you pay for the electricity the system produces, at a set rate per kilowatt-hour.

Can I use a home equity loan to pay for solar?

Yes. Many homeowners use a home equity loan or line of credit from their bank or credit union. Compare its total cost with any installer-arranged loan before deciding.

Why might my solar loan payment go up?

Some solar loans are structured so the monthly payment increases after a set period unless you make a large lump-sum payment toward the balance. Ask about this before signing, and get the full payment schedule in writing.