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Reasons To Opt For A Nothing Down Solar Lease

Methods for financing a PV system include purchasing it, using debt based financing, or a nothing down solar lease. Paying for the system in full grants the owner the benefit of profiting from all the savings the equipment provides, resulting in greater long term savings and a faster return than the alternatives. Furthermore, incentives in the form of tax benefits and rebates can be used to cover part of the cost.

If up front capital is not an option, debt based financing may be suitable. Because interest will be paid on the loan, the buyer will need longer to achieve a return on the investment and will need to make continuous payments that cut into savings. Alternatively, a nothing down solar lease gives buyers the opportunity to start saving money immediately without the need to invest in the full cost of the PV system.

Although specific terms of the nothing down solar lease may vary, they typically involve a solar company charging a fixed monthly payment in exchange for the use of a PV system that offsets electric demands from the grid. With no money up front, the company will install the equipment and handles maintenance and repairs during the course of the agreement. The monthly fee combined with regular utility payments should be less than the current bill. The customer starts benefiting immediately without upfront costs, but not to the same extent as someone who has the means and desire to pay the full cost of the PV system upfront. The incentives from owning the equipment are not available with this type of financing.

It is important to understand the terms of the agreement in order to determine projected savings, inflation assumptions, and what happens when the term expires. Projected savings from using alternative energy relies on assumptions of energy demand and grid energy costs. Because the installed system accounts for a roughly fixed amount of power, more money is saved as prices on energy from the grid increases. Most of the fixed monthly payments are subject to an interest rate of 3-4% per year, which is usually less than the rate increases of the utility company. Because energy costs are expected to continue rising, a PV system is a great way to limit the impact of the higher prices. Ensure the assumptions used to calculate the estimated cost increase are logical in order to determine long term financial benefits.

A nothing down solar lease typically lasts 15-20 years, but this can be transferred to a new owner in the event of a sale. Upon fulfillment, some companies offer an option to purchase the equipment. Finding a reliable company with long term potential is necessary because they will be providing the expertise needed for maintaining the PV system.

For those who are considering installing solar power, buying a system outright is the best choice to reap the best long term financial gain. Because not everyone wants to take on the full cost or has the capital to invest in the total system, alternative financing methods like a nothing down solar lease can be an excellent way to get the system installed and save money immediately.

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