Solar Panel Lease vs. PPA vs. Loan: Which Did You Sign, and Can You Get Out?

When homeowners call us upset about their solar deal, one of the first things we untangle is what they actually signed. Solar companies use three very different structures, and people are often surprised to learn which one they are locked into. Understanding the difference is the first step to understanding your options.

Solar loan: you own the panels

With a solar loan, you purchase the system and finance it, much like a car loan. You own the panels, you may be eligible for tax credits, and you owe a lender, often a third-party finance company, not the installer.

Common problems: inflated savings projections, undisclosed dealer fees baked into the loan, payment “step-ups” that increase over time, and a UCC-1 lien filed against your home. Many homeowners only discover the lien when they try to sell or refinance.

Solar lease: the company owns the panels

With a lease, a solar company owns the equipment on your roof and you pay a fixed monthly rent to use it. You typically do not get the tax credits, and you are committed for the full lease term, often 20 to 25 years.

Common problems: escalating monthly payments, transfer headaches when you sell your home, and the discovery that the “savings” assumed your utility rates would rise far faster than they did.

Power purchase agreement (PPA): you buy the power

With a PPA, the company owns the system and you agree to buy the electricity it generates at a set per-kilowatt-hour rate. In theory you only pay for what the system produces.

Common problems: rate escalators that climb every year, production estimates that never materialize, and confusion when the system underperforms but you are still billed.

What they have in common

No matter which structure you signed, the same questions determine whether you can get out:

• Were the savings misrepresented?
• Were key terms hidden or never disclosed?
• Was the sale high-pressure or deceptive?
• Does the system actually perform as promised?
• Was a lien placed on your home without clear disclosure?

A “yes” to any of these can be grounds to challenge the agreement, regardless of whether it is a loan, lease, or PPA.

How to find out which you have

Look at the title of your main agreement and how you are billed:

• A monthly payment to a bank or finance company usually means a loan.
• A fixed monthly payment to the solar company usually means a lease.
• A per-kilowatt-hour charge usually means a PPA.

If it is still unclear, that is completely normal, these documents are written to be confusing. A free case review sorts it out for you and tells you honestly whether you have a path to cancel.