SOLAR GLOSSARY
A comprehensive comparison of solar financing types — PPAs, leases, loans, and liens — to help you understand your contract and your exit options.
Updated March 2026 · Not legal advice · Our methodology
In brief: There are four main ways to finance residential solar panels: cash purchase, solar loan, solar lease, and solar PPA (Power Purchase Agreement). Each works differently in terms of who owns the panels, how you pay, what liens or filings may be attached to your property, and how difficult it is to exit the arrangement. Understanding which type you have is the first step to understanding your options.
| Feature | Cash Purchase | Solar Loan | Solar Lease | Solar PPA |
|---|---|---|---|---|
| Who owns the panels | You | You | Solar company | Solar company |
| Upfront cost | $15,000-$35,000+ | $0 down typically | $0 | $0 |
| Monthly payment | None | Fixed loan payment | Fixed + escalator | Per kWh + escalator |
| Escalator clause | No | No | Typically yes | Typically yes |
| Tax credit (ITC) | You claim | You claim | Company claims | Company claims |
| UCC lien filed | No | Sometimes | Usually yes | Usually yes |
| Property lien | No | Some loan types | No | No |
| Maintenance | You | You | Company | Company |
| Home value impact | Increases | Increases | Minimal/complicated | Minimal/complicated |
| Contract length | N/A (you own it) | 5-25 years | 20-25 years | 20-25 years |
| Exit difficulty | N/A | Moderate | Difficult | Difficult |
If you're not sure what type of solar financing you have, here's how to figure it out:
Check your contract: The title page or first section of your agreement should identify the contract type. Look for terms like "Power Purchase Agreement," "Solar Lease Agreement," "Loan Agreement," or "Installation Agreement." If you can't find your contract, check your monthly statements — who you pay and how (fixed amount vs. per kWh) reveals the type.
The term "solar lien" is used loosely and can refer to several different types of filings. Here's what each actually means:
A UCC lien is filed by the solar company to establish their ownership of the solar equipment on your property. This is standard for PPAs and leases. It applies to the equipment (personal property), not your house (real property). While it can cause confusion during title searches, it doesn't technically give the solar company a claim on your home. UCC removal guide →
Some solar loans — particularly PACE (Property Assessed Clean Energy) loans — create an actual property lien. This is more significant than a UCC filing because it directly affects your real estate title and equity. PACE liens are attached to the property (not the person), meaning they transfer to the new owner if you sell. In some cases, PACE liens have priority over the mortgage, which has caused significant controversy.
In rare cases, a solar installer may file a mechanic's lien if they haven't been paid for their installation work. This is a real property lien and can affect your ability to sell or refinance. Mechanic's liens are typically resolved by paying the outstanding balance or through legal challenge if the lien is improper.
PACE loans warrant special caution: Based on our research, PACE (Property Assessed Clean Energy) loans have been particularly problematic for homeowners. These loans attach to your property tax bill, have priority over your mortgage in some jurisdictions, and can create serious complications when selling or refinancing. If you have a PACE loan, consult an attorney before attempting to sell your home.
If you purchased your system outright, there's no contract to exit. You own the panels and can remove them, keep them, or sell them with the house at any time. The only potential issue is if you used a contractor who filed a mechanic's lien for unpaid work.
To exit a solar loan, you can: (1) pay off the remaining balance, (2) refinance the loan, (3) if selling your home, use sale proceeds to pay off the balance, or (4) in rare cases, negotiate with the lender. If you have a PACE loan, the exit process is more complex due to the property tax assessment structure.
Lease exit options include: cooling-off period cancellation (if recently signed), scheduled buyout, transfer to a new homeowner, legal challenge if you were misled, or professional exit assistance. Solar lease exit guide →
PPA exit options are similar to lease exits: cooling-off period, fair market value buyout (typically after year 5-7), transfer to buyer, legal remedies, or professional assistance. Solar PPA exit guide →
For a comprehensive overview of all exit strategies regardless of financing type, see our complete guide to getting out of a solar panel contract.
Not sure about your solar financing type or your exit options? Get a free contract review.
The total cost of solar over 25 years varies dramatically depending on the financing type. Here's a rough comparison for a typical 6 kW residential system:
| Factor | Cash Purchase | Solar Loan | Lease/PPA (2.9%) |
|---|---|---|---|
| Estimated total cost (25 yr) | $12,600* | $22,000-$32,000 | $40,000-$55,000 |
| After-loan free electricity | Yes (immediately) | Yes (after payoff) | Never (unless buyout) |
| ITC benefit to you | ~$5,400 | ~$5,400 | $0 |
*Cash purchase cost shown after 30% ITC. All figures are rough estimates for a 6 kW system and will vary by location, system size, loan terms, and electricity rates. These are for illustration only — get specific quotes for your situation.
Search your state's Secretary of State UCC filing database using your name to check for UCC liens. For property liens (like PACE), check your county recorder's office or request a title search. If you have a solar PPA or lease, there is almost certainly a UCC filing. If you have a solar loan, there may be either a UCC filing, a property lien, or both, depending on the loan type. UCC lien explainer →
In our editorial assessment, cash purchase offers the best long-term value, followed by a solar loan. Both give you ownership, tax credits, and eventually free electricity. Leases and PPAs can make sense for homeowners who can't qualify for financing or tax credits, but the escalator clause and lack of ownership make them more expensive long-term. If you're considering a lease or PPA, push for a 0% escalator. Escalator clause guide →
Not directly, but you can achieve a similar outcome. If you buy out your PPA or lease (purchasing the system at fair market value), you then own the panels. You could potentially finance the buyout with a personal loan if needed. The net effect is the same: you convert from a third-party arrangement to ownership. The question is whether the buyout cost makes financial sense given where you are in the contract. Full exit guide →
PACE (Property Assessed Clean Energy) loans are a specific type of solar financing that is repaid through your property tax bill. Unlike traditional loans, PACE liens attach to the property (not the borrower), may have priority over your mortgage, and transfer to the new owner when you sell. This creates unique complications. Some states have restricted PACE programs due to consumer protection concerns. If you have a PACE loan, consult an attorney before selling or refinancing.
Yes, significantly. Cash-purchased systems are the easiest — the panels are an asset that adds value. Loan-financed systems require paying off the remaining balance (or the buyer assumes it). Leases and PPAs require the buyer to assume the contract or you to buy out the system, which can complicate and delay the sale. PACE loans can be the most problematic due to their property tax lien structure. Selling with solar guide →
Get a free preliminary contract review to identify your financing type and explore your options.
Disclaimer: This guide is for informational purposes only and is not legal advice. Solar financing terms, liens, and exit options vary by provider, state, and contract. Results vary by individual situation. We do not advise homeowners to stop making payments or breach contractual obligations. SolarPanelExit.com and TRU Solar Cancellation share common ownership. Consult a qualified attorney before taking action. See our Ownership Disclosure and Advertiser Disclosure.