Unless they have a lot of cash on hand, most Americans rely on financing for the big-ticket purchases in life. That includes major investments like houses, cars — and, now, solar panels. But, while home mortgages and auto loans are familiar territory for many households, sorting through financing options for solar can seem daunting.
It’s commonly recognized that owning a house or car provides better value than renting or leasing, and homeowners should know that it’s no different when it comes to solar. A study by the National Renewable Energy Laboratory (NREL) estimates that owning solar, whether through cash or with loan financing, saves up to 30% more over the long term compared to leasing. Put another way, EnergySage estimates that homeowners that go solar with a lease only get 10-30% of the savings from solar, with the rest going to the leasing company; by contrast, homeowners that use solar loans have the benefit of capturing 40-80% of solar’s value.
Three Benefits of Solar Loans
These savings comparisons are often convincing enough, but the benefits of solar loans go beyond the bottom line:
1. Payments can go down instead of up
With solar loans through Mosaic, homeowners have the ability to lower their monthly payments after month 18 if they pay off more than 30% of their loan within 18 months. Also, all the payments stop once the loan is fully paid off. By contrast, leases often have “escalator” clauses tied to utility rates that increase payments over time.
2. Upgrade solar systems
If your customer thinks they might want to expand their solar installation or add battery storage down the road, it’s straightforward they own their system — in fact, Mosaic can even connect solar installers to financing in some cases. However, if they are leasing, they don’t own the system, so they can’t add to it.
3. Flexibility if they move
Solar leases can be transferred, but the process is arduous and can deter buyers. By contrast, when your customers go solar with a loan, they may have the option of transferring their loan as part of the home sale through Mosaic’s online platform — or, if they pay off the loan, they can keep the panels and take them with them to their new home.
Loans Are Driving the Home Solar Market
Loans have a compelling case, and it’s unsurprising that it’s being reflected in the market. While leases played an outsized role in driving home solar during its early days, their share of sales peaked in 2014, and customer-owned solar (whether via loans or cash) officially surpassed leases in 2017. Greentech Media projects that this trend will only continue, and they summarize it well: “Leasing was a necessary temporary solution that sparked the original growth of residential solar, but the future is cash and loans.”
We couldn’t have said it better ourselves! Mosaic was founded to empower people to prosper from the clean energy revolution, and we’re committed to making it easy.