Is a prepaid purchase the same thing as a prepaid lease?

[San Diego]

Hello,
Is a prepaid purchase the same thing as a prepaid lease?

I am getting quotes from different vendors and some say prepaid purchase and some say prepaid lease.

Thanks for clarifying.

[Naptown]

There is a difference
A prepaid purchase is exactly that. You purchase the equipment, own it and all the incentives will belong to you. Of the two options this will have the higher initial cost (by a substantial margin) This will generally give you the largest return on the investment depending on where you live.

A prepaid lease is an agreement to lease the system. You make one payment to them and you have the use of the equipment for the term of the lease. Some have buyout options some don't, depends on the leasing company. In this instance the leasing company will be responsible for the maintenance of the system and you can at lease end have the option to extend the lease, buy it or have it removed. This will be a lower up front cost as the leasing company will own the system and all the incentives.

[San Diego]

Prepaid lease vs. purchase

There is a difference
A prepaid purchase is exactly that. You purchase the equipment, own it and all the incentives will belong to you. Of the two options this will have the higher initial cost (by a substantial margin) This will generally give you the largest return on the investment depending on where you live.

A prepaid lease is an agreement to lease the system. You make one payment to them and you have the use of the equipment for the term of the lease. Some have buyout options some don't, depends on the leasing company. In this instance the leasing company will be responsible for the maintenance of the system and you can at lease end have the option to extend the lease, buy it or have it removed. This will be a lower up front cost as the leasing company will own the system and all the incentives.

Thanks Naptown,
On the lease option what do you think the equipment will be worth in 20 years? There is a $3000 price difference. The nice thing about the lease is it covers the inverter which might go out within 10 years.

If you had the choice which one would your recommend doing?

Thanks for your feedback!

[SunEagle]

Thanks Naptown,
On the lease option what do you think the equipment will be worth in 20 years? There is a $3000 price difference. The nice thing about the lease is it covers the inverter which might go out within 10 years.

If you had the choice which one would your recommend doing?

Thanks for your feedback!

$3000 seems like a very low number for the cost difference between a purchased and leased system. Can you provide the rough details on system size, purchase cost and lease cost?

[Naptown]

$3000 seems like a very low number for the cost difference between a purchased and leased system. Can you provide the rough details on system size, purchase cost and lease cost?

Ditto on the above

[San Diego]

Price comparison Prepaid lease vs Purchase

6.37 KW DC 26 Modules (Canadian solar) 26 panels
Annual Production 10395 Kwh
Invertors are Enphase Energy

Prepay Cost $25,247 vs. Purchase $25,247
Total Rebates included vs. 0
Out of Pocket Costs $13835 vs. $25247
Tax Credit included vs. $7574
Complete systems Service included vs. not included

Net Costs: $13,835 vs. $17,672


It is a great price. We are just trying to figure out which option is best. In 20 years how much the system going to cost for us to keep it? Also on the lease the replacement for the invertor is included. He said it has a value of $4K. The invertor will need to be replaced in about 10 years.

[SunEagle]

6.37 KW DC 26 Modules (Canadian solar) 26 panels
Annual Production 10395 Kwh
Invertors are Enphase Energy

Prepay Cost $25,247 vs. Purchase $25,247
Total Rebates included vs. 0
Out of Pocket Costs $13835 vs. $25247
Tax Credit included vs. $7574
Complete systems Service included vs. not included

Net Costs: $13,835 vs. $17,672


It is a great price. We are just trying to figure out which option is best. In 20 years how much the system going to cost for us to keep it? Also on the lease the replacement for the invertor is included. He said it has a value of $4K. The invertor will need to be replaced in about 10 years.

Ok.

My take is this:
Purchase and own for $25247 less tax credit of $7574 = $17672 for system plus have much lower electric bills.
Lease and use for 240 months for a total of $13835 plus have lower electric bills.

Summarize Lease Option: Your out of pocket may eventually equal $13835 but that happens over a period of 240 months at a small fraction per month of the total.
You don't have to pay for any service or repairs and you still end up paying almost $4000 less than the Purchase option.

Summarize Purchase Option: You have to fork out $25247 day one or you finance that and you add the Loan Interest to this cost. If you purchase it out right you get to use 30% of that as a deduction sometime next year on your tax return. You have to replace or repair anything that fails past the system warranty. And finally you end up paying at least $4000 more than the Lease option.

To me it is a no brainier. I would go with the Lease which ends up costing me less without the headaches of repairing or replacing anything and still have lower electric bills.

[inetdog]

Summarize Lease Option: Your out of pocket may eventually equal $13835 but that happens over a period of 240 months at a small fraction per month of the total.

I think that you missed the statement that this was a prepaid lease. One lump sum at the start, but at the end of the lease you do not own the equipment, whatever it may be worth at that point. The company offering the prepaid lease is discounting immediately for the rebate and tax benefits rather than forcing the OP to wait to file and get the money back.

[SunEagle]

I think that you missed the statement that this was a prepaid lease. One lump sum at the start, but at the end of the lease you do not own the equipment, whatever it may be worth at that point. The company offering the prepaid lease is discounting immediately for the rebate and tax benefits rather than forcing the OP to wait to file and get the money back.

Hmmm.. I thought that was a typo. I guess I didn't understand that he would be paying for the entire lease agreement up front.

I still feel the lease is better unless he plans on moving out before he gets the full use of the lease agreement. He still pays thousands less than the purchase plan as well as not having to pay for the inverter replacement after 10 years or any other equipment failure. He will also pay less in interest on a $13,835 loan than a $25,247 loan.

Thanks for keeping me straight.

[SoCalsolar]

I wouldn't own CS panels

I wouldn't own CS panels. I might be prodded into a lease with them if I thought I would not own the home they were installed on for more than 7 years and the leasing company was solid. Which leasing company are you working with? Sun Run, Clean Power? Your lease is only as good as the company that offers it. It is likely a ppa only referred to as a lease so as not to have to explain the differences. Too many people are buying solar on price alone. You ought to read what happened to the San Diego school district recently. Had panels installed 5 years ago leased them and both the installer and panel manufacturer are gone and the panels are dead. There is a significant quality gap that exists between panels. People ought to buy value and not solely on price. For me its jeans/clothes at Walmart. If I buy the cheapest Rout 66 no name brands they never fit right. If I even slightly upgrade to Lee or Levi's they fit right and perform better. Solar is not a use it, consume and it's gone go buy another one product. I would suggest that there is nothing that lasts 25 years that quality is not a major factor in making a buying decision. When you balance quality and price you get the best value. Too many people buy solar as a commodity solely based on price. This is a mistake. Has anyone on this board ever purchased anything from or known anyone that has purchased anything from China that has lasted 25 years? A watch? A clock? An electronic device of any sort? Anything with hundreds of soldered points? That has actually been in use for 25 years? I am continually amazed at the lack of critical thinking that people exhibit in the face of the solar "Gold Rush."

Read the article below. I'm off my soap box now. Hope it all work out for you.

snail trails.pdf

[San Diego]

Bosch vs. Canadian solar panels

Which panels are better Bosch or the Canadian solar? I heard Bosch were moving out of the solar business?

[Naptown]

neither according to some
look into a Sunpower lease they are pretty competitive and the equipment is top shelf.