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  • Writer's pictureSocrates of Solar

Going Solar: Should You Finance Solar Panels or Pay in Cash?

Updated: Jan 14, 2022

Buying became the most popular method to acquire solar panels by the end of 2016, according to Greentech Media. Lower prices helped spur this trend toward ownership. There are two different ways to purchase solar equipment. Let's take a look at the benefits and drawbacks of buying outright vs. financing:

Initial Cost

You'll face a much larger upfront expense if you pay in cash. Financing reduces this cost by up to 100 percent. Certain lenders like Clean Energy Federal Credit Union can fully finance solar equipment purchases. Eligible borrowers needn't make down payments.


You can qualify for government incentives regardless of whether you buy your equipment outright or finance it. Most people obtain major tax deductions and credits. You might recoup one-quarter to one-third of the initial expense. Many home equity and solar loans have tax-deductible interest.

The 2021 federal tax credit equals 26 percent of a new system's cost. For example, the government would give you a rebate of $4,810 if you spend $18,500. Indiana exempts solar equipment from property and sales taxes as well.

System Design

Buying outright may give you greater control over the design of your system. If you take out a solar loan, you'll need the lender to approve the design and possibly certain upgrades. A home equity line of credit might provide more freedom to design or modify your system in any manner.

Backup batteries could keep the lights on during an electrical outage. The additional cost of this optional equipment makes it harder to pay for an entire system in cash. Fortunately, you can find lenders that willingly finance the cost of batteries.


Equipment ownership produces substantial savings in the long run. Solar panels generate enough energy to recoup their cost in approximately 10 years. Buy them outright to achieve the greatest savings; they cost significantly less when you don't pay interest.

If you can't afford to pay in full, the monthly payments on a 15-year solar loan are often equal to the associated power bill. You'll save money when you pay it off or make a substantial down payment. Banks usually offer financing terms of 20, 1 5, 12 or five years.

Borrowing Options

You can find unsecured financing as well as solar loans that require collateral. Some lenders finance a portion of the cost for a shorter period of time until you receive renewable energy tax credits. Buyers can also use home equity loans to purchase panels.

Interest rates change depending on current economic conditions, and they're partially based on your personal credit history. Many borrowers pay around 2 to 5 percent. Secured solar financing and home equity loans tend to cost less than their unsecured counterparts.

Credit Scores

Borrowing involves credit rating requirements and may affect your score. You'll probably need a score above 650 to qualify for financing. An advantage of buying panels outright is that it doesn't matter if you have a low rating or blank credit record.


Financing may have a fixed or adjustable rate, but it's frequently fixed. If you pay with cash, it will make your monthly expenses more predictable because you won't face utility or interest rate fluctuations.

Resale Value

When you own solar panels, it's easier to sell real estate. Buildings with panels tend to attract buyers more swiftly. They often achieve higher resale values as well. The equipment boosts selling prices by around 4 percent, according to the Department of Energy.


Owners don't have to fix problems with their systems until after the warranties expire. Maintenance needs and costs remain the same regardless of whether you take out a loan or pay in cash.

System upkeep rarely becomes a major issue. Much of the equipment is guaranteed against failure for at least a decade. Many units perform well for approximately 25 years. The average owner spends around $2,000 to $5,000 on maintenance and repairs throughout a system's life.

Regardless of how you acquire it, this equipment will reduce your carbon footprint. The best choice may depend on your credit score and how much cash you possess, but buying outright normally yields the most benefits. Please contact our company if you're interested in going solar. We have nearly 20 years of experience and offer reliable systems with affordable pricing.


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https://www solar-panels-for-home

https://www solar-rebates-incentives/in/ sites/prod/files/2020/01 /f70/Guide%20to%20Federal%20Tax%20Credit%20for%20Residential%20Solar%20PV.pdf

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