Solar Lease vs Solar Loan
Making the Solar Switch can be expensive and challenging. A lot of banks now offer loans and monetary assistance while getting your house, office and industry equipped with solar energy harnessing devices.
April 28, 2022. By News Bureau
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Making the Solar Switch can be expensive and challenging. A lot of banks now offer loans and monetary assistance while getting your house, office and industry equipped with solar energy harnessing devices.
Here’re some insights on Solar Loans and Solar Leases - How they work, the Pros and Cons, and how to make your pick.
The first and the most simple way of getting a Solar Panel installed is to pay upfront, claim the tax benefits and enjoy reduced electricity bills.
The main problem with paying upfront is that the payment tends to be a moderately big amount, for a one-time payment. Not to add, the returns are slow, and it takes around 3-7 years to reimburse the money via savings in electricity costs.
This arrangement suits lot of people who don’t mind a big investment upfront or slower returns. Such a Solution makes it very difficult for people with less disposable income. The most lucrative and popular options for people requiring financing for their Solar Setup are Solar Leases and Solar Loans. Both options have their pros and cons, and we’re here to break it down for you.
First is a Solar Lease. A Solar Lease is basically letting someone install Solar Panels at your house, and using their solar panels for generating electricity for your own use. The ownership of the Solar Panel remains with the company, while you enjoy reduced electricity bills. The main benefit of leasing is that there is no upfront cost, and the savings come in the form of reduced Electricity Bills.
Such a system is suitable when you don’t have the liquid money for ownership, or would like to enjoy the benefits of saving on bills without the hassle of owning Solar Panels yourself. As you don’t own the panels, someone comes to clean/maintain them periodically, and leasing saves you from the hassle of maintenance. Additionally, a lot of Solar Leasing Schemes let you buy/transfer ownership to you after a certain time is up if you would want to do that.
Sounds good right? The only major drawback in the plan is that you can’t claim tax benefits on your Solar Panels, and the wait-around time for buying the Solar Panels is too long.
But if you want to switch to Solar Energy, and don’t want to invest lot of money in the beginning.
The next one is a Solar Loan. Solar Loans, as the name suggests, are loans taken up to set up a Solar Power Plant. As the name suggests, the panel will be in your name. It is a great investment, and comes with additional Tax Benefits, and is an overall more sustainable and better option for the environment, and saves you money. Many times, Solar Loans are clubbed with Home Loans. The main benefit of owning is that it’s a Capital Asset, and can be resold if the need arise, it continuously saves you money from Electricity Bills, and has a lot of tax benefits. Many banks offer special rates for setting up Solar Panels, owing to environmental benefits.
Another really great deal, right? Buying has its fair share of cons too. The loan adds an element of Debt to your portfolio, monthly payments can be difficult at the start. Since you own your panels, you would have to maintain them, get them serviced regularly, and would be responsible for their upkeep. Another major con is that the turnaround time for your investment is significantly high, around 5 to 7 years, at the minimum. So the returns are extremely slow.
These are different ways in which you can finance your switch to Solar Energy. We hope this article helped you in your Solar Energy Journey. Reach out to us for more information, Navitas Solar designs solar solutions for every budget.
Here’re some insights on Solar Loans and Solar Leases - How they work, the Pros and Cons, and how to make your pick.
The first and the most simple way of getting a Solar Panel installed is to pay upfront, claim the tax benefits and enjoy reduced electricity bills.
The main problem with paying upfront is that the payment tends to be a moderately big amount, for a one-time payment. Not to add, the returns are slow, and it takes around 3-7 years to reimburse the money via savings in electricity costs.
This arrangement suits lot of people who don’t mind a big investment upfront or slower returns. Such a Solution makes it very difficult for people with less disposable income. The most lucrative and popular options for people requiring financing for their Solar Setup are Solar Leases and Solar Loans. Both options have their pros and cons, and we’re here to break it down for you.
First is a Solar Lease. A Solar Lease is basically letting someone install Solar Panels at your house, and using their solar panels for generating electricity for your own use. The ownership of the Solar Panel remains with the company, while you enjoy reduced electricity bills. The main benefit of leasing is that there is no upfront cost, and the savings come in the form of reduced Electricity Bills.
Such a system is suitable when you don’t have the liquid money for ownership, or would like to enjoy the benefits of saving on bills without the hassle of owning Solar Panels yourself. As you don’t own the panels, someone comes to clean/maintain them periodically, and leasing saves you from the hassle of maintenance. Additionally, a lot of Solar Leasing Schemes let you buy/transfer ownership to you after a certain time is up if you would want to do that.
Sounds good right? The only major drawback in the plan is that you can’t claim tax benefits on your Solar Panels, and the wait-around time for buying the Solar Panels is too long.
But if you want to switch to Solar Energy, and don’t want to invest lot of money in the beginning.
The next one is a Solar Loan. Solar Loans, as the name suggests, are loans taken up to set up a Solar Power Plant. As the name suggests, the panel will be in your name. It is a great investment, and comes with additional Tax Benefits, and is an overall more sustainable and better option for the environment, and saves you money. Many times, Solar Loans are clubbed with Home Loans. The main benefit of owning is that it’s a Capital Asset, and can be resold if the need arise, it continuously saves you money from Electricity Bills, and has a lot of tax benefits. Many banks offer special rates for setting up Solar Panels, owing to environmental benefits.
Another really great deal, right? Buying has its fair share of cons too. The loan adds an element of Debt to your portfolio, monthly payments can be difficult at the start. Since you own your panels, you would have to maintain them, get them serviced regularly, and would be responsible for their upkeep. Another major con is that the turnaround time for your investment is significantly high, around 5 to 7 years, at the minimum. So the returns are extremely slow.
These are different ways in which you can finance your switch to Solar Energy. We hope this article helped you in your Solar Energy Journey. Reach out to us for more information, Navitas Solar designs solar solutions for every budget.
- Vineet Mittal, Director, Navitas Green Solutions Pvt. Ltd.
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