The lease escalator
The largest single variable. Between a flat lease and a 3.9% escalator the lease total moves from $45,000 to $73,961 on the same opening payment. Ask for a flat lease before you accept the comparison as fixed.
HyreSolar tools
Lease vs Buy Calculator
Both paths totalled over the same term, with the fee and the escalator where they actually sit.
A lease is compared on a monthly payment and a purchase on a price, which is why they are so hard to weigh against each other. This puts both on the same basis: what you pay in total over the term, with the dealer fee inside the purchase and the escalator compounded into the lease.
What this returns at the defaults
A $30,000 system bought outright against a lease opening at $150 a month with a 2.9% escalator: the lease totals $64,772 over 25 years and the purchase totals $30,000. Buying is cheaper by $34,772, and it ends with an owned asset, where the lease ends with a renewal, a buyout or a removal. Put a 20% dealer fee on the purchase and it still wins by $27,272.
Last updated . Data as of 11 August 2026.
Lease versus buy model
Both paths totalled over the same term.
— Result
— Purchase total
— Lease total
— Final lease payment
Nominal totals, not discounted. No federal credit on either path.
HyreSolar sells neither systems nor leases and takes no placement fee.
What the comparison does and does not settle
The lease and purchase figures compared here are nominal totals, not discounted. A dollar paid in year 25 is counted as a dollar. Discounting would narrow the gap, because the lease spreads its payments out while the purchase is front-loaded. It would not usually close it at these numbers, but you should know which way the omission cuts.
The two paths do not end in the same place, and the totals do not capture that. A purchase ends with equipment you own, which you can keep, sell with the house, or replace. A lease ends with whatever its end-of-term clause says: renewal, a buyout usually at fair market value, or removal and roof restoration. That asymmetry is real and is not a number here.
The case for a lease was never mainly financial. It is that somebody else owns the equipment, carries the maintenance and takes the performance risk. Whether that is worth $34,772 is a judgement, and it is yours, but you should make it knowing the figure rather than not.
Buying wins by a lotThe usual result at 2026 prices. Check the assumptions anyway: a very low opening payment or a flat escalator narrows it substantially.
Close to levelUsually a flat or very low escalator against a purchase carrying a large dealer fee. Worth modelling carefully, because the tiebreaker is what you own at the end.
Leasing winsUncommon on these inputs. If you get this result, check the purchase price is a real cash price and not one already inflated by financing.
How to use this calculator
Every input below is a number you can find, not one you have to guess. This is where each one comes from.
- 01
Enter the cash price of the system
What the system costs outright, with no financing attached. This is what the purchase path is being judged on.
Where to find it Ask the installer for the cash price in writing. If it differs from the financed price, the gap is a dealer fee and belongs in the next field.
- 02
Enter the dealer fee, if you are financing the purchase
Leave it at zero for a genuine cash purchase. Enter the percentage if you intend to take a solar loan, because the fee is inside what you borrow.
Where to find it The gap between the cash price and the financed price. Our loan calculator works through what the fee does in detail, including interest on the fee itself.
- 03
Enter the lease opening payment
The first year’s monthly figure, which is the number the lease is sold on.
Where to find it The proposal. It is usually the only payment figure quoted anywhere in the presentation.
- 04
Enter the lease escalator
The fixed annual increase. This is where most of the lease’s total cost is created, and it is easy to skim past in the agreement.
Where to find it Search the agreement for "escalator" or "annual increase". Our escalator calculator shows what each rate compounds to.
- 05
Match the term to the agreement
Compare over the lease’s actual term so both paths cover the same period. Twenty-five years is common.
Where to find it The lease agreement states the term. Note what happens at the end of it, because that clause is not in this comparison.
How this calculator works
Total the lease
Twelve months of each year’s payment, with the escalator compounded, summed across the term.
Total the purchase
Cash price, grossed up for a dealer fee if you are financing.
Take the difference
Which path costs more in nominal dollars over the same period.
Then weigh what is not in the numbers
Ownership at the end, maintenance responsibility, performance risk and what happens if you sell.
The formula, in full
lease total = Σ over years of 12 × opening × (1 + escalator)^y. buy total = cash ÷ (1 − dealer fee). difference = lease total − buy total. Nominal, undiscounted, no federal credit.
A worked example, start to finish
A $30,000 cash purchase against a 25-year lease opening at $150 a month with a 2.9% escalator, the structure most commonly presented as an alternative to buying.
Inputs
- Cash price
- $30,000
- Dealer fee
- 0% (cash purchase)
- Purchase total
- $30,000
- Lease opening
- $150 / mo
- Escalator
- 2.9% / yr
- Year-25 lease payment
- $298 / mo
- Lease total
- $64,772
Result
Buying cheaper by $34,772
The lease costs more than twice the purchase in nominal terms, and at the end of it you own nothing. Against that, the lessor carried maintenance and performance risk for 25 years. That is the trade, stated in dollars rather than in adjectives.
How the answer moves
The same $30,000 system against the same lease, varying one input at a time. Every figure is computed by the calculator on this page.
| Change | Purchase total | Lease total | Result |
|---|---|---|---|
| Base casecash purchase, 2.9% escalator | $30,000 | $64,772 | Buying by $34,772 |
| Purchase financed, 20% dealer fee | $37,500 | $64,772 | Buying by $27,272 |
| Lease with no escalator | $30,000 | $45,000 | Buying by $15,000 |
| Lease escalator 1.9% | $30,000 | $56,924 | Buying by $26,924 |
| Lease escalator 3.9% | $30,000 | $73,961 | Buying by $43,961 |
| Lower opening payment, $120/mo | $30,000 | $51,817 | Buying by $21,817 |
Buying wins on every row here, which is the honest result at 2026 prices. But note the spread: the gap ranges from $15,000 to $43,961 depending on the escalator alone. The lease term you are offered matters more than the comparison itself.
What moves this number most
Ranked. A proposal can change any of these without saying anything untrue, so these are the inputs to check first.
Whether the purchase carries a dealer fee
A cash purchase at $30,000 and a financed one at $37,500 are different products. If you are financing, model the loan properly rather than treating the sticker price as the cost.
The opening payment
Linear, and worth watching because a low opening payment paired with a high escalator can total more than the reverse. Compare totals, never monthlies.
The term
A longer term gives the escalator more time to compound, which is why 25-year leases cost so much more than their monthly payment suggests.
What you own at the end, which is not in the totals
A purchase leaves you with equipment. A lease leaves you with a decision the contract has already framed: renew, buy out at fair market value, or have it removed and the roof restored.
What happens if you move
The asymmetry that catches people. An owned system transfers with the house; a lease has to be assumed or bought out, and our research found a provider may look to the original customer for all remaining payments where a buyer will not assume. See selling with a lease or loan.
Common mistakes with this calculation
Comparing a monthly payment to a purchase price
They are not comparable quantities and the comparison always flatters the lease. Put both on a total over the same term, which is what this tool exists to do.
Using the financed price as the cash price
If your $30,000 purchase is really $37,500 financed, the comparison changes by $7,500. Get a genuine cash price before running anything.
Ignoring the escalator because the percentage looks small
Compounded over 25 years, 2.9% nearly doubles the payment and adds $19,772 to the lease total against a flat agreement. It is the most consequential number in the document.
Treating nominal totals as the final word
These are undiscounted. Discounting narrows the gap because the lease is spread out. It rarely reverses the result at these numbers, but you should know the omission favours the lease.
Forgetting the end-of-term clause
The comparison stops at year 25 and the contract does not. Renewal, buyout and removal-with-restoration are three different costs, and one of them is already written into your agreement.
Assuming maintenance is worth nothing
It is a real service and the lessor really does carry it. The point of this tool is to price it, not to dismiss it. At the defaults, 25 years of maintenance and performance risk is costing you $34,772.
Before the totals
These two paths do not produce the same object, so the totals are not the whole comparison
The calculator puts a lease total beside a purchase total. That is necessary and it is not sufficient, because at the end of one path you own a power station and at the end of the other you may own nothing.
HyreSolar analysis. A purchase converts money into an asset that sits on your roof, appears in the sale of the house, and continues to generate after the payments stop. A lease or PPA converts money into a service for a term. Both can be sensible. They are not commensurable simply because both produce a dollar total, and a comparison that stops at the totals has left out the thing that most distinguishes them.
HyreSolar analysis. The asymmetry runs the other way too, and it is only honest to say so. Ownership means you own the failures. An inverter at year twelve, a monitoring system that stops reporting, a module that fails outside its warranty window and a roof that needs work under the array are all yours. Under third-party ownership those are nominally the owner’s problem — if the contract says so, which is a clause to read rather than a property of leases in general.
The useful next step. Find the end-of-term clause in the lease or PPA before you compare anything. Establish whether you may buy the system, on what basis the price is set, whether you may require removal, and who pays for it. A total without that clause attached is a number without a noun.
Illustrative chart. It shows a structural point about third-party ownership, not a finding about any particular agreement.
The 2025 amendment, and what it did not change
Tax credits follow ownership, and the homeowner side has closed
Tax credits are the part of the comparison that moved recently, and a great deal of published solar advice has not caught up with it.
Source fact. 26 U.S.C. §25D, the Residential Clean Energy Credit, was amended by Public Law 119-21, §70506 on 4 July 2025. The termination subsection now reads: “The credit allowed under this section shall not apply with respect to any expenditures made after December 31, 2025.” Before that amendment it carried a termination date of 31 December 2034. The credit was not tapered — it was ended on a date. While it applied, the rate was 30%.
Source fact. The operative test is placed-in-service, not signature and not payment. An expenditure is treated as made when the original installation of the item is completed, not when the contract is signed and not when the invoice is paid.
HyreSolar analysis. Under a lease or PPA the homeowner never claimed 26 U.S.C. §25D anyway, because a third party owns the equipment and credits follow ownership. So the amendment does not change the lease side directly. What it changes is the relative picture: a homeowner buying outright no longer has a federal homeowner credit to set against the purchase price, while a third-party owner may still claim a business-side credit on a system it owns. Whether any of that value is passed through to you in a lower payment or a gentler escalator is a commercial matter to negotiate, not a tax outcome you can claim.
HyreSolar analysis. A note on how we source this, because it matters here. When we checked the IRS consumer FAQ page on these credits on 2026-09-05, it still described the pre-amendment schedule running to 31 December 2034. We follow the enacted statutory text rather than an agency explainer that has not caught up, and the source we read it from is listed under Data and sources on this page. This is not tax advice and we are not your adviser — confirm your own position before relying on it.
The useful next step. If a lease or PPA pitch mentions "the tax credit", ask whose, and get the answer in writing. Our pages on the §25D expiry and §48E set out both sides, and the incentive finder walks through who claims what by ownership type and date.
Where a purchase quietly becomes expensive
A financed purchase can carry a fee that makes it behave like a lease
The cleanest argument for buying is that you stop paying eventually. A large enough dealer fee folded into the loan erodes that argument before the first payment.
Source fact. In Issue Spotlight: Solar lending practices, the CFPB reported that hidden fees in solar lending were typically 10 to 30% of the cash price, and sometimes above 50%. The structure is that the lender pays the installer less than the contract price, and the shortfall is added to what you finance, which is what permits an unusually low headline interest rate to be advertised.
HyreSolar calculation. On a $30,000 cash price, a fee at the bottom of that reported range adds $3,000 to the financed amount, and at the top of the range $15,000. This is arithmetic on a published range applied to a round number, not a quote we have observed.
HyreSolar analysis. This is why the calculator has a dealer fee field on the purchase side. Comparing a lease against a cash purchase and a lease against a financed purchase are different exercises, and the second one is the one most people are actually facing. A 0.99% financing rate carrying a 30% dealer fee is not cheap money; it is expensive money with the price moved into a different column.
The useful next step. Ask for the cash price and the financed price as two separate figures, in writing. The difference is the fee. If the answer is that there is only one price, ask what the installer would accept for the same system paid in full today.
Illustrative chart. It applies a published range to an assumed price and represents no actual lender, installer or contract.
Beyond the totals
The six differences the dollar totals cannot show
Everything here is structural rather than numerical, which is exactly why it does not appear in a side-by-side total.
| Question | Buying | Leasing or PPA | What its absence from the pitch means |
|---|---|---|---|
| Who owns the equipment | You, from the outset. | A third party, for the whole term unless a purchase option is exercised. | If nobody said, assume the third party. Ownership is the fact the rest of the comparison hangs off. |
| Who claims a tax credit | 26 U.S.C. §25D is closed for expenditures made after 31 December 2025. | The owner may claim a business-side credit. That is not your credit. | A pitch citing "the tax credit" without saying whose is the single most common misdirection here. |
| What happens when it breaks | Yours to fix, under whatever warranties you hold. | Typically the owner’s, if the contract says so. Read the clause rather than assuming. | Maintenance is a genuine lease advantage and it is a contract term, not an inherent property. |
| What happens at sale | The system transfers with the house. A loan may need settling. | A buyer must usually qualify and assume the agreement, or you settle it. | The most common practical friction with third-party ownership. See selling with a lease or loan. |
| What is filed against the property | A loan may involve a financing statement. | A lease or PPA may also involve one on the equipment. | Ask directly whether a UCC-1 will be filed and how it is released. See what a UCC-1 does. |
| Who carries underproduction | You. Less output means less saving, and the loan payment is unchanged. | A PPA bills metered output, so the owner carries it. A lease bills a fixed amount, so you do. | Lease and PPA are used interchangeably in sales conversations and differ exactly here. |
A description of two contract structures, not a recommendation. HyreSolar originates neither and is paid by neither.
One thing both paths carry
Both paths depend on a tariff that neither of them controls
Whichever side of this comparison you land on, the value of what the array produces is set by somebody who is not party to your contract.
Source fact. The California Public Utilities Commission adopted decision D.22-12-056 on 15 December 2022, replacing NEM 2 with a net billing tariff for customers of PG&E, SCE and SDG&E. Under it, exports are compensated from the CPUC Avoided Cost Calculator rather than at the retail rate. Eligible customers receive an export compensation rate lock-in of 9 years from the date of interconnection, effective retroactively to 15 April 2023.
HyreSolar analysis. Consider what that means for each path. A purchase absorbs a tariff change directly: the array produces the same, and the savings fall. A lease absorbs it worse, because the payment is contractual and rises on its escalator regardless of what happened to the value of the electricity. A PPA is somewhere in between, since you pay per kilowatt-hour, but the rate you pay per kilowatt-hour is also contractual and also escalating.
HyreSolar analysis. This is the strongest structural argument for treating an escalator with suspicion in either agreement. It commits you to a rising payment for a benefit whose value is set elsewhere and can fall. Our escalator calculator shows what the compounding is worth over a term, and our study of California’s transition covers what a tariff change actually looked like in practice.
The useful next step. Ask your utility whether your export credit is locked, and for how long. Then ask whether the agreement in front of you has any mechanism at all that responds to a change in it. The answer is almost always no, and knowing that is the point.
Eight questions, both paths
What to establish before either total means anything
Each has a documentary answer. Together they turn two dollar totals into an actual comparison.
- What is the cash price of the system, before any financing?
The anchor for the entire purchase side. Everything else is derived from it.
- What dealer fee is inside the financed amount?
The CFPB found these to be typically 10 to 30% of the cash price, and sometimes above 50%. It is a fair question with a numeric answer.
- Is the third-party agreement a lease or a PPA?
They are billed differently and they allocate production risk differently. The words are used loosely in conversation and precisely in the contract.
- What is the escalator, and is it negotiable?
Frequently the most consequential term in the document and frequently the one with the most give in it.
- What are the end-of-term options, and how is any buyout priced?
A schedule, a formula, or "fair market value" determined by the owner. Only the first two are numbers.
- What happens if I sell the house before the term ends?
Transfer conditions, buyer qualification, and any fee. This is where third-party ownership most often becomes a practical problem.
- Will a financing statement be filed against the property?
And how is it released. Ask on both paths, not only the lease.
- A comparison presented as a monthly payment against a monthly payment
A payment can be made to look like anything by moving the term. Compare totals over the same period, which is what this calculator does.
The real blind spots
What this calculator cannot do
The lease-vs-buy calculator adds up two payment streams correctly. Most of what separates these two paths is not a payment stream.
It does not value the asset
The purchase total has no credit in it for the fact that you own something at the end, and the lease total has no debit for the fact that you may not.
That omission favours the lease in the totals, which is worth knowing when the totals are close. Whether solar adds value at sale is covered in solar and home value.
It does not discount
Both totals are nominal — future dollars summed with present ones. This is the industry convention and it flatters whichever path pushes cost furthest into the future.
The year-by-year figures are on the page if present value matters to your decision.
It does not model maintenance
An inverter replacement, a monitoring subscription and any repair labour sit on the purchase side and are typically absent from it in this model.
Where a lease genuinely covers maintenance, that is real value the totals do not show. Check whether your contract actually says so.
It does not know your tax position
It defaults the federal homeowner credit to zero because the statute has terminated it for expenditures after the cutoff date.
State and utility programmes are separate, vary widely and are outside this model. We are not tax advisers and this is not tax advice.
It cannot read your contract
End-of-term clauses, buyout formulas, transfer terms, production guarantees and lien filings decide more lease outcomes than the escalator does.
Run the contract red flags checker on the document.
It cannot tell you to do either
HyreSolar does not install solar, does not lend, is not a utility, and holds no dataset of quotes, bids or completed installations. Nothing here is a price we have observed. That is also why these tools are free to tell you that the answer is to do nothing.
Not buying, and not leasing, remains a real option. If you expect to move soon, if the roof needs work first, or if your export credit is poor and your daytime consumption is low, the honest answer may be neither column.
Important: this is a planning estimate
- Nominal totals, not discounted. The omission favours the lease, which spreads payments out.
- No federal credit on either path. §25D is $0 for systems placed in service after 31 December 2025.
- Does not value maintenance, monitoring, performance guarantees or the transfer of risk to the lessor.
- Does not model the end of the lease term: renewal, buyout or removal and roof restoration.
- Does not model loan interest on the purchase path. Use the loan calculator for that.
Questions this calculator answers
Is it better to lease or buy solar panels?
On nominal cost at 2026 prices, buying wins comfortably: $30,000 against $64,772 for a 25-year lease opening at $150 with a 2.9% escalator, a gap of $34,772. The lease’s case is not financial, it is that somebody else owns the equipment and carries maintenance and performance risk. This tool prices that trade so you can decide whether it is worth it.
Why does the lease total so much more than the payment suggests?
Because of the escalator. A $150 payment rising 2.9% a year reaches $298 by year 25, and the total across the term is $64,772 rather than the $45,000 a flat $150 would give. Compounding over a long term is where the cost is created.
Does this include the federal tax credit?
No, on either path. The residential credit under §25D is $0 for property placed in service after 31 December 2025, so there is nothing to add for most 2026 purchases. Under a lease the credit historically went to the third-party owner rather than to you in any case.
Should I put a dealer fee on the purchase side?
Only if you are financing the purchase rather than paying cash. A solar loan typically carries a dealer fee inside the financed principal, so a $30,000 system becomes $37,500 borrowed at a 20% fee. Even then buying wins here by $27,272, but the comparison should be honest about which purchase you mean.
What is not counted in these totals?
Discounting, the value of maintenance and performance risk transfer, and what happens at the end of the lease term. The first favours the lease slightly. The second favours the lease genuinely. The third could go either way depending on whether your contract ends in a renewal, a buyout or a removal.
What happens to a lease when I sell the house?
It has to be assumed by the buyer or bought out. Our research found that where a buyer will not assume, the provider may look to the original customer for all remaining payments, a serious exposure that has no equivalent on the ownership path, where the equipment simply transfers with the house.
Does a leased system add value to my home?
The evidence for a premium is much weaker for leased systems than for owned ones, and the widely quoted study underpinning solar home value is 97% Californian and ends in 2013. Our home value page sets out what the research actually supports and what it does not.
Can I buy out a lease early?
Usually, on terms the agreement sets, and frequently at fair market value determined by a method the contract specifies. Read that clause before signing rather than when you need it, because it decides what your exit costs.
Is a power purchase agreement the same as a lease?
Not quite. A lease charges you for the equipment; a PPA charges you per kilowatt-hour generated. Both are third-party ownership and both typically carry escalators, so this comparison works for either, enter the PPA’s average monthly charge as the opening payment.
Who fixes it if it breaks?
Under a lease, the lessor, and that is a genuine benefit you are paying for. Under ownership, you, through a workmanship warranty from the installer and separate product warranties from manufacturers. Our workmanship warranty page explains why no manufacturer backstops the installation labour, which is the gap that matters if your installer goes under.
The research behind these numbers
Every assumption in this calculator is argued from primary sources somewhere in our research library. These are the pages that matter for this one.
- Selling a house with a lease or loan The provision under which a provider may look to the original customer for all remaining payments if a buyer will not assume.
- Solar and home value Why owned and leased systems are treated very differently at resale, and what the underlying study actually covers.
- What zero-down actually costs The CFPB finding on hidden fees, typically 10 to 30% of the cash price and sometimes above 50%.
- The workmanship warranty What the lessor is actually carrying, and why no manufacturer backstops it.
- When your installer goes under How the three warranties come apart, which matters more for an owned system than a leased one.
- Solar sales regulation by state Which states require total contract cost and escalators to be disclosed.
More solar calculators
Solar lease escalator calculator
What the monthly lease payment becomes in year 25, and the cumulative paid.
Solar proposal analyzer
Normalise a quote to $/W, unwind a dealer fee, and price year-1 production. Not a market index.
NEM vs net billing calculator
The cents-per-kWh gap between import rate and export credit, and what that gap is worth.
Want a more accurate estimate for your home?
Actual results depend on roof, usage, utility rules and a real proposal. Matching is still being built. The form is an enquiry, not a dispatch line.
Written and audited by
HyreSolar Research
Primary-source research, data analysis and fact checking
We are a research desk, not a sales floor. We read the statute, the tariff, the code section, the federal filing or the manufacturer data sheet ourselves, and we publish the figure with the document it came from and the date we retrieved it. Where a number cannot be traced to a primary source, we publish the shorter page and say what we could not verify. That rule has cost us whole sections, and it is the reason the rest can be trusted.
- 160
- primary sources read and cited
- 220
- figures with a retrieval date
- 115
- federal and state government sources
- 66
- researched pages published
How this desk works
- Primary sources only. Statutes from the legislature’s own publishing system, federal data from the agency that collects it, code text from the adopted edition, manufacturer claims from the data sheet. We do not cite an article that cites a source; we go and read the source.
- Every figure carries its provenance. A named document and the date we retrieved it, so you can check it and so you know how old it is. Retrieval dates are not decoration: an EIA rate from May is a different fact from an EIA rate from August.
- We publish what we could not verify. Every research page carries a section naming the things we tried to establish and could not, and why. A paywalled standard, a state website that refused the request, a manufacturer that publishes no figure at all.
- We separate measurement from modelling from our own reasoning, and label which is which on the page. A laboratory measurement, an assumption inside a modelling tool and our own inference are three different kinds of claim and they are never presented as one.
- We do not sell solar, and we take no payment for placement, ranking or a favourable mention. Nobody buys a position on this site.
Data as of 11 August 2026. Authorship on this site is organisational: the analysis belongs to the desk rather than to a named individual, and we do not publish credentials we do not hold. Our editorial policy sets out how we source, date and correct what we publish.
Data and sources
- Issue Spotlight: Solar lending practices (CFPB, retrieved 2026-08-11. Context on dealer fees and third-party financing structures.)
- Residential Clean Energy Credit (§25D) (IRS, retrieved 2026-08-11. Basis for excluding a federal credit from both paths.)
- U.S. Solar Photovoltaic System Cost Benchmark (NREL, retrieved 2026-08-16. Context for the $30,000 default cash price.)