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Cash Poor Financing: Solar Lease

Dear Solar Fred,

I want to go solar, but thanks to the housing bubble, I have no home equity. What little cash I save through my job is being stuffed into a secret 401k mattress that my wife says I can’t touch until she divorces me or until our kids think we’re old and penniless, whichever comes first.

Tell me how I can go solar without upfront costs.

Sincerely,

For Richard or Poorer (mostly poorer).

Dear Rich,

Hey, man, I may be single, but I feel your pain. (Not really.) But don’t worry. I have several solutions that I will outline for you over several posts.

First, you can lease instead of buy. It’s the same concept as leasing a car with an option to buy. The biggest outfit doing this right now is called Solar City (www.solarcity.com). They’ll give you the solar panels up front. Sweet. You pay a monthly leasing fee plus what’s left of your electric bill. Awesome. Between the leasing bill and the lower electric bill, Solar City says you’ll be paying about 10%-20% less than your usual electric bill and the solar panels cost you nothing upfront. Wha-hoo! Don’t tell the wife and sign me up, says Richard!

Not so fast.

  • You’ve got to have a 720 credit rating or better.
  • You’ve got to live in California, Oregon, or Arizona.
  • You’re locked into those panel leasing payments for 15 years, so plan to stay where you are.
  • If you do move and sell your house, the new owners could take over your lease or you could move your system to your new house and hope that you’ve got the same sun exposure and usage. There’s also the option to buy or upgrade to better panels.

In part two of Cash Poor Financing, I’ll fill you in on another low upfront cost buying option. It’s called a Power Purchase Agreement or (PPA).

Last modified: December 8, 2015

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