Quick answer
Cash is cheapest, loans are the default, home equity is cheapest borrowed money, and leases/PPAs are a service, not a purchase. With the 30% federal credit gone for 2026 installs, the financing decision matters more than it has in a decade: interest and dealer fees can quietly cost more than the old credit was worth. This page covers the mechanics and the math of paying — for the own-vs-rent decision itself, see solar lease vs buy.
Key takeaways
- No federal credit in 2026. The 30% ITC expired December 31, 2025; 2026 systems pay full price, so financing costs come straight out of your savings (details).
- Total cost, not monthly payment, is the number to compare. A $20,000 system at 7.9% over 10 years costs about $28,900 all-in — the payment looks fine and the interest is invisible.
- Dealer-fee loans can add 20–30% to the sticker. That “$0 down, same-as-cash” loan priced at $4.20/W while cash buyers pay $2.80/W has a fee hiding in the watt price.
- HELOC rates float. Cheap today is not cheap in year five.
- Ownership still captures state incentives (SRECs, rebates, exemptions); leases and PPAs sign those away to the provider.
The worked example: one system, four ways to pay
A 7 kW grid-tied system at $20,000 cash price (roughly $2.85/W — consistent with our cost per watt guide), generating ~$1,700/year in avoided utility bills:
| Payment path | Money in | Total paid | Financing cost | Notes |
|---|---|---|---|---|
| Cash | $20,000 day one | $20,000 | $0 | Maximum lifetime savings; opportunity cost = whatever that cash would have earned |
| Unsecured solar loan, 7.9%, 10 yr | $0 down | ~$28,900 | ~$8,900 interest | Payment ≈ $241/mo; fast approval, no home at risk, highest rate |
| Home-equity loan, 6.5%, 10 yr | $0–closing costs | ~$27,300 | ~$7,300 interest | Payment ≈ $227/mo; lowest borrowed rate; your home is collateral |
| HELOC, prime + margin (variable) | $0 down | rate-dependent | rises/falls with prime | Cheap intro rate can move; stress-test at +3% |
(Arithmetic: $20,000 at 7.9% APR over 120 months = $241/month × 120 ≈ $28,900. At 6.5% = $227/month × 120 ≈ $27,300. Run your own quote’s exact terms — the shape of the comparison is what matters here.)
Two things the table hides: savings accrue the same either way (the panels don’t know who lent you money), and any loan whose rate exceeds your utility’s rate escalation makes solar a losing bet on paper — check both against our payback calculator.
Dealer-fee loans: the $4.50/watt trick
The most expensive financing in solar is often invisible. Many “$0-down” installer loans carry an origination fee of 15–30% that the lender recovers by marking up the system price:
- Cash price: $2.80/W → 7 kW = $19,600
- Financed price: $4.20/W → 7 kW = $29,400
Same panels, same crew — the $9,800 difference is the fee. It’s legal and disclosed somewhere in the loan docs, but it silently erases years of savings. Always ask for the cash price and the financed price, in writing, and subtract. If the gap exceeds what a home-equity loan would cost, take the equity route and the cheaper money.
Home equity: cheapest borrowed money, real risks
- HELOC (line of credit): variable rate, often interest-only during the draw period, flexible draws. Great if rates fall; painful if prime climbs — budget the payment at +3% to stress-test.
- Home-equity loan (fixed): fixed rate and payment; full amount upfront.
- The risk: your home secures the debt. A solar system on a foreclosed roof was still a bad trade.
- Tax angle: interest on funds that substantially improve the home may be deductible if you itemize — a question for a tax professional, not a solar salesman.
Leases and PPAs: financing or not-financing?
Technically you’re not financing an asset — you’re buying electricity as a service. Monthly cost is low and predictable, maintenance is theirs, and escalators (2–3%/year is common) are the catch over 20 years. You also hand the state incentives and the home-value gain to the provider. The full own-vs-rent analysis, including when leasing genuinely wins, is its own page: solar lease vs buy 2026.
What still reduces the bill in 2026
With the federal credit gone, stack what’s left — these flow to the system owner, not to a lease provider:
- State tax credits and rebates (vary by state — what your state offers)
- SREC markets where they exist (income per MWh generated)
- Sales-tax and property-tax exemptions in many states
- Net metering / export credits — the biggest lever and the most variable (explained here)
Questions to ask any lender — before you sign
- What is the cash price vs the financed price for the same system? (dealer-fee detector)
- What is the APR, term, and total of payments? (not “monthly payment” alone)
- Is the rate fixed or variable? If variable: indexed to what, and is there a cap?
- Are there prepayment penalties? (Paying off early should save you money, full stop.)
- Who services the loan, and what happens if the installer goes out of business?
- Does the loan fund on installation or on permission-to-operate? (You shouldn’t start paying for a system the utility hasn’t approved.)
FAQ
Is financing solar still worth it without the federal tax credit?
What credit score do I need for a solar loan?
Why is my financed quote more expensive per watt than the cash price?
Do leases or PPAs count as financing?
Should I use a HELOC to buy solar?
Next logical reads
Lease vs buy: the decision Payback calculator Cost per watt Full system cost breakdown Tax credit status