Solar Loan vs Cash vs Lease (2026)

The solar calculator prices a system you buy. Net cost is the cash you need after the incentive you typed. Payback divides that cash by one year of savings. A loan, a lease, and a power-purchase agreement are different contracts. They can all be called "going solar" in an ad. They do not all match this formula. This guide says which questions belong to which contract, and it does not invent an interest rate, a lease escalator, or a dealer fee. Those figures are unverified here.

Cash is the model on the page

You pay the net cost. You own the equipment. The savings line is electricity you no longer buy, subject to every caveat in the payback guide: the rate may be wrong for exports, the production factor may be wrong for the roof, and the 25-year line does not include repairs. On the labeled example — 1,200 kWh a month, factor 1,400, $3 per watt, $0.20 per kWh, incentive 0 — net cost displays as $30,857.14 and payback as 10.71 years. If you actually have that cash, the example is a complete cash case. Most people should replace every input before they treat 10.71 as theirs.

Ownership is also what makes a tax credit relevant, when a credit exists. The IRS residential credit is 30 percent for qualified property installed from 2022 through December 31, 2025, and it is not available for property placed in service after that date. A 2026 purchase does not get that credit merely because you paid cash. A lease can fail the credit for a second reason: the lessee may not be the owner the statute is talking about. Do not assume the incentive field is yours to fill because a salesperson said "we take the credit." Ask who claims it, in writing.

A loan keeps the cash formula and adds a cost the formula ignores

Borrowing does not change system size. It changes how you pay the net cost. Interest and fees are extra dollars. This site will not show a sample APR, a 20-year payment, or a dealer fee, because publishing one would be an invention. Ask the lender for the APR, the term, the fees, and the total of payments. Compare that total with the net cost from the calculator. The difference is the financing cost. If total of payments is far above net cost, a short payback in the calculator can still be an expensive loan.

A monthly solar payment that is lower than last year's electric bill is not proof the deal wins. The bill may fall by less than the payment if the system is small, the export rate is poor, or the roof is shaded. Put the lender's payment next to the calculator's monthly version of savings (annual savings ÷ 12). On the example, $2,880 a year is $240 a month. A loan payment above $240 does not "replace the bill" on these example inputs. Your inputs will differ. Do the subtraction with yours.

A lease or PPA may not be your system

In a typical lease or power-purchase agreement, another company owns the array. You pay them rent or a rate per kWh. The calculator's net cost is then the wrong numerator, because you did not buy the system. The savings line is also slippery: you should compare their kWh price with the utility's kWh price, not compare their payment with a cash payback. Escalators, a buyout in year six, roof repairs, and what happens when you sell the house are contract terms. None of those numbers is verified here, so none is printed. Read the contract.

Ask a short list, and stop if the answers are oral only. Who owns the panels? Who insures them? Who gets any remaining incentive? What is the price per kWh in year one, and how may it change? What do you owe if you move? What is the buyout, as a formula you can compute today? If they will not write the buyout formula, you do not have a price.

Pick the contract after the size is real

Size the array from your kWh and a roof-specific production factor, using how many panels you need. Get a cash price in dollars per watt from at least one quote that sells you the system. Run the calculator. Only then listen to a financing offer, and make that offer beat the cash case by a comparison you can recompute. A lease that never states a cash price cannot be checked against this site at all.

The federal credit, state rebates, and utility incentives change the cash case only when they are real for your contract and your year. State figures are not in the calculator yet. The 2026 federal residential credit for a new installation is the sourced zero described above. Whether the panels pay for themselves is a cash question. Answer it before you let a monthly payment redefine it.