When people say “we’re going solar,” they might be talking about three completely different things. The difference comes down to one simple question: who owns the system on your roof?
Direct Ownership: Cash and Loans
In a cash purchase, you own the equipment outright. The system produces electricity for your home and reduces how much power you buy from the utility. There’s no monthly solar payment, just the upfront investment and normal maintenance over time. A solar loan works much the same way except you finance the system and pay it off over time. You still own the equipment and benefit from the electricity it produces, which is why many homeowners use loans to go solar without a large upfront payment.
If you choose a loan, look for transparency. Some solar loans include “dealer fees” rolled into the total, which increases the financed price compared to the cash price. Asking to see both the cash price and the financed price can make it easier to understand what you’re actually paying.
Third-Party Ownership: Leases and PPAs
The third model is third-party ownership, usually structured as a lease or a power purchase agreement (PPA). This works differently because the system on your roof is owned by a financing company rather than the homeowner. In practice it creates a three-way relationship: the homeowner hosting the system, the solar contractor who installs it, and the company that owns the equipment and collects the payments. Instead of buying the system, you agree to pay either a monthly lease payment or a rate for the electricity the system produces.
The advantage is that upfront costs are often very low and the system is typically monitored and maintained by the company that owns it. The tradeoff is that the long-term economics work differently because the equipment is not yours. The financing company is essentially operating a small power plant on your roof and selling the electricity back to you under the terms of the agreement. These agreements can also attach obligations to the property itself, which means if the home is sold the buyer may need to assume the agreement or the contract may need to be resolved as part of the sale.
Choosing Your Model
None of these models are automatically right or wrong. They simply serve different goals. Cash or loan ownership tends to produce the strongest long-term savings because the homeowner ultimately owns the equipment. Third-party ownership tends to appeal to homeowners who prefer minimal upfront cost and a simpler monthly arrangement. The most important thing is understanding which model you’re being offered and how the numbers work over time.