The thought of renewable, clean energy often leaves many homeowners leasing solar panels rather than making a purchase because of the seemingly lower upfront price. Most Americans are living on a tight budget because of the current economy. Many households would like to be able to make the switch to renewable energy, but there has been some uncertainty due to renewable energy having expensive upfront costs.
Since this seems like the most affordable option, what is the truth about leasing solar panels?
The short answer is that the consumer is not the winner in this type of agreement. Instead it is the finance company that is offering no upfront fees that comes out ahead. When it comes to photovoltaic systems, the truth is a bit more complicated.
Basically, when a homeowner decides to go with leasing their solar panels the company installs a system and the homeowner pays a fee. They then are put on a payment plan and given a monthly usage charge. The fine print often doesn’t disclose the fact that the interest rate will rise each year at a fairly substantial rate. Before the homeowner realizes it, the money they thought they would save on the utility bill is now going to the finance company, and at the end of the contract, they equipment does not belong to the homeowner.
Many people complain about leasing solar panels because of the hidden fees and terms. Sure, it looks and sounds great on the surface, but the fine print hides the real reason why an affordable investment is the better way to go. Before a homeowner signs any agreement, they should take the time to read the fine print thoroughly and ask plenty of questions. If there are no realistic answers for those questions it may be in the consumer’s best interest to walk away. If promises are made on top of the contract, it is important to get those promises in writing with a superior’s signature.
As an example of why not to lease solar equipment, one must remember that the equipment is borrowed and it does not belong to the homeowner. Once the current lease is up, what happens when the homeowner does not agree to the terms of the new lease? The leasing company will come out and remove the equipment. The question then becomes who will make the necessary repairs to the roof when the system is removed? These are questions that the homeowner needs to consider before entering into any type of agreement.
The company leasing solar panels owns the photovoltaic system and installs them as borrowed equipment. However, what the company does not tell the consumer is that they are the ones that will benefit from the tax breaks and credits. A system may cost a company $4,000-$6,000 in total, but what the company gets from the consumer through the long term contract is considerably more. And the cost to the consumer increases annually, padding the pockets of the finance company even more.
Buying solar panels for a photovoltaic system is now an affordable option for homeowners. For an investment of under $12,000, most residential properties and small businesses can make this one-time purchase. Making this switch comes with up to 30% for a tax credit, which can drop the overall cost to below $9,000. The biggest benefit is that the homeowner owns the complete system, and once the units are paid for, there will be minimal fees for maintenance and upkeep. Another advantage to owning this type of system is that in most states a home that runs on solar power will have an increased property value, further adding to its appeal.
Deciding to utilize a renewable energy source has never been more affordable. However, leasing solar panels is not the viable answer. The promise of no upfront costs and low financing sounds great, but the truth is in the fine print. In order to truly benefit from a photovoltaic system, the homeowner needs to make an affordable, one-time investment that continues working for decades to come.