Solar Lease vs Loan vs PPA: How Your Exit Options Differ

Short answer

With a loan you own the panels and owe a lender. With a lease you pay to use panels a company owns, and with a PPA you buy the power they produce. Loans end through payoff or refinance, while leases and PPAs usually end through a buyout, a transfer to a home buyer or a contract term.

The three ways solar is sold

Loan (or cash). You own the system. A lender may hold a lien or a UCC fixture filing until the loan is paid.
Lease. A company installs and owns the system and you pay a monthly fee to use it, often for 20 years or more.
Power purchase agreement (PPA). A company installs and owns the system and you pay for the electricity it produces at a set rate, which may rise each year.

Side by side

	Loan	Lease	PPA
Who owns the panels	You	The company	The company
What you pay	Loan payments	Fixed monthly fee	Per unit of power produced
Who claims tax credits	You, if any apply	The company	The company
Paper that may be on your property records	Lien or UCC fixture filing	Check your county records	Check your county records
If you sell the home	Pay off the loan or the buyer assumes it	Transfer to the buyer or buy out	Transfer to the buyer or buy out
Main exit routes	Payoff, refinance, rescission	Buyout, early termination, transfer	Buyout, early termination, transfer

How to tell which one you have

Look at the first pages of your contract and your monthly statement. A loan will show an annual percentage rate, a finance charge and a lender name separate from the installer. A lease shows a monthly rent and an equipment schedule. A PPA bills a price per kilowatt hour. If the paperwork says loan but you were told it was a lease or a free program, that gap is worth writing down and may be a sales red flag.

Tax credits: what changed

For years, solar loans were sold on the promise of a 30% federal tax credit. For systems you own, that credit is the residential clean energy credit under 26 U.S.C. 25D. Public Law 119-21, signed in July 2025, ended it for expenditures made after December 31, 2025, and the IRS treats an expenditure as made when installation is completed. A system you own that was installed in 2026 does not qualify, even if you paid in 2025.

With a lease or PPA, the company that owns the system claims the tax credits and incentives, not you. If you were told you would personally get a credit or a check on a leased system, ask for that promise in writing.

Exit options by type

Loan. Within days of signing you may be able to cancel the sale and, if the loan is secured by your home, rescind the loan. Later, the main routes are payoff or refinance. The CFPB found that dealer fees often add 30% or more to the loan principal, so compare the payoff figure with the cash price you were quoted. Be careful with missed payments; see what happens if you stop paying a solar loan.

Lease and PPA. Read the purchase option, early termination and transfer sections. The FTC notes that a buyer of your home may need to meet the company's credit requirements and that fees may apply. If you signed recently, check your cancellation window first.

Selling a home with solar

Many homeowners first discover the problem when they try to sell. Solar lenders commonly record a UCC fixture filing in the property records. The CFPB has warned that these filings can cloud the title and may need to be released or subordinated before a sale or refinance. Ask for a payoff letter or transfer packet early, well before closing. Our guide on every way out compares the options.

Questions people ask

Is a solar lease better than a loan?

Neither is better for everyone. A loan means you own the system and its value, but you carry the debt. A lease or PPA means the company owns and maintains it, but you are bound to its terms for many years.

Can I buy out my solar lease?

Many leases and PPAs include a purchase option or early termination price. The amount is set by your contract, so ask the company for a written buyout quote.

Do I get the solar tax credit on a lease?

No. The company that owns the system claims the credits. For systems you own, the federal residential credit ended for installations completed after December 31, 2025.

What happens to a solar PPA when I sell my house?

Usually the buyer takes over the agreement if they qualify, or you buy out the system. Contracts often require advance notice before a sale.

Solar lease vs loan vs PPA: how your exit options differ