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Prepaid lease vs. purchasing a solar system

asked 2013-06-04 15:55:00 -0500

alysahammond gravatar image

updated 2014-02-10 09:11:30 -0500

tom gravatar image

I am considering buying a solar photovoltaic system for my home. I have received some proposals for a prepaid lease and an outright purchase. Under what scenarios is purchasing a solar system a better option than a pre-paid solar lease? Thanks.

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answered 2014-02-08 10:37:53 -0500

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updated 2014-02-08 10:40:10 -0500

There are advantages to both. First compare the net out of pocket from the purchase to the prepaid amount. You may find that the purchase net amount is lower than the prepaid amount - however you have to come up with the full purchase price and wait until the incentives and tax credit are returned to you - so this may be a hurdle to ownership right out of the gate.

After this the considerations shifts between you owning the asset and there not being any liens on your home or possible complications during a sale of your home VS. another company owning the system but maintaining it and fixing it for the entire term. A leasing company will be responsible to fix it the entire time while owning it - that will fall on the homeowner. (String inverters will fail by year 15 and will need to be replaced).

Final consideration is what happens at year 26 - owning it is obvious but leasing it you may have to pay more or return it. Popular believe is the leasing company will let you have it but that is not guaranteed. It will still have a decade or more of use left in it and you may have to return it.

When it is all said and done it may be worthwhile to do the prepay lease simply because someone else will maintain it. If your tree falls on it - the leasing company fixes the solar system and you fix your house.

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Asked: 2013-06-04 15:55:00 -0500

Seen: 1,352 times

Last updated: Feb 08 '14