Best way to finance solar?

[russ]

I know all about leverage - The company I worked for over 15 years believed in going for the max and owing the max possible.

The guys you listed didn't make their money borrowing and investing in others schemes - they were their own schemes where they controlled the shots -

[Lomag]

Depends on how much you like owing others - I owe no one anything and prefer it that way.

Amen. Most Americans are in debt until they die as is much of the world. But we need suckers to keep the economy going.

[Ian S]

Amen. Most Americans are in debt until they die as is much of the world. But we need suckers to keep the economy going.

Maybe better to die in debt. After all who's going to come after you for it?

[Noob]

Maybe better to die in debt. After all who's going to come after you for it?

I was kind of going to write the same thing, that it's the ultimate game of hot potato and you just throw the potato out to your kids as you go. But then I thought better of getting into an economic/political/ethical discussion.

[Lomag]

America is just too materialistic. So you would rather die in debt? Ok, that's fine, I understand the logic since your debt dies with you. Personally, I'd rather leave something for my kids when I die. Most likely a large Roth IRA account that they could use for their own retirements if they haven't been as wise savers as their parents. But, to each their own.

Back to topic, just as car leasing is made for people who can't afford that certain level of car -- as is solar-leasing. Leasing anything is never a good idea in general. If you can't afford it in cash, you shouldn't be buying it (aside from a house or car). Financing is a great alternative if you really want something, so long as the interest rate is decent and that one can actually afford the payments. If the average Joe would sit down and figure out how much interest they pay (throw away) in a year or over their lifetime, I think they'd rethink certain life choices. Frankly most don't care, as long as they can meet the minimum payments, life goes on. I know way too many people who live this way, in debt to "the man" and are stressed out to no end. That's not my style. I don't pay interest, I receive it from the interest paying suckers.

[Noob]

America is just too materialistic. So you would rather die in debt? Ok, that's fine, I understand the logic since your debt dies with you. Personally, I'd rather leave something for my kids when I die. Most likely a large Roth IRA account that they could use for their own retirements if they haven't been as wise savers as their parents. But, to each their own.

Back to topic, just as car leasing is made for people who can't afford that certain level of car -- as is solar-leasing. Leasing anything is never a good idea in general. If you can't afford it in cash, you shouldn't be buying it (aside from a house or car). Financing is a great alternative if you really want something, so long as the interest rate is decent and that one can actually afford the payments. If the average Joe would sit down and figure out how much interest they pay (throw away) in a year or over their lifetime, I think they'd rethink certain life choices. Frankly most don't care, as long as they can meet the minimum payments, life goes on. I know way too many people who live this way, in debt to "the man" and are stressed out to no end. That's not my style. I don't pay interest, I receive it from the interest paying suckers.

To be clear I don't mean that I personally want to do that to future generations, just that debt itself isn't necessarily a horrible thing. It's not imperative that everyone die with the house paid off.

I've avoided any kind of car leasing my whole life, but this concept of "prepaid leasing" for solar is kind of freaking me out.

[Lomag]

To be clear I don't mean that I personally want to do that to future generations, just that debt itself isn't necessarily a horrible thing. It's not imperative that everyone die with the house paid off.

I've avoided any kind of car leasing my whole life, but this concept of "prepaid leasing" for solar is kind of freaking me out.

I too wonder how the pre-paid leasing is going to work out down the road. I was very temped to do it but chose to buy the system out right.

As for your comment of it not being imperative that everyone die with their house paid off? I beg to differ. It's absolutely critical that your house is paid off, not only before you die, but before you retire, if you actually want to live a comfortable retirement. Now if you want to die in debt, and your house is paid off when you retire, then you can take a reverse mortgage and have fun.

[russ]

Maybe better to die in debt. After all who's going to come after you for it?

In many parts of the world your kids have to take on that debt.

[Ian S]

Back to topic, just as car leasing is made for people who can't afford that certain level of car -- as is solar-leasing.

Solar leasing is not at all like an individual leasing a car. Solar leasing actually saves an individual money otherwise why do it? It may not be much but when the lease payment + new electric bill < old electric bill, it's essentially like someone else paying part of one's electrical bill with that payment being tax free and continuing for 20 years. Plus, the leasing company covers maintenance on the system. Leasing solar is far more like the traditional business uses of leasing not car leasing by individuals.

As for the prepaid lease, the advantage it offers is there are additional tax breaks (mainly accelerated depreciation) not available to an individual buyer. Some gets passed on to the lessee, some is just more profit for the lessor. When I signed my prepaid lease in 2011, the hard numbers showed that purchasing the same system would have cost me an extra $6-7K essentially doubling my outlay over the prepaid lease. I felt it was a no-brainer and I've seen nothing yet to suggest otherwise. I may not own the system at the end of the lease but I will have had in effect, a 17% tax free return on my investment over those 20 years. At that point they can remove it and take it to the landfill for all I care although I'm betting they'll just abandon it as uneconomic to remove and resell.

[Ian S]

In many parts of the world your kids have to take on that debt.

What if you have no kids?

[Noob]

At that point they can remove it and take it to the landfill for all I care although I'm betting they'll just abandon it as uneconomic to remove and resell.

Hmm, check the contract, perhaps there's some kind of "then we come in and spend 10 minutes jackhammering the equipment, so there" clause.

[Ian S]

hmm, check the contract, perhaps there's some kind of "then we come in and spend 10 minutes jackhammering the equipment, so there" clause.

lol!

[Mitchum]

Solar leasing is not at all like an individual leasing a car. Solar leasing actually saves an individual money otherwise why do it? It may not be much but when the lease payment + new electric bill < old electric bill, it's essentially like someone else paying part of one's electrical bill with that payment being tax free and continuing for 20 years. Plus, the leasing company covers maintenance on the system. Leasing solar is far more like the traditional business uses of leasing not car leasing by individuals.

As for the prepaid lease, the advantage it offers is there are additional tax breaks (mainly accelerated depreciation) not available to an individual buyer. Some gets passed on to the lessee, some is just more profit for the lessor. When I signed my prepaid lease in 2011, the hard numbers showed that purchasing the same system would have cost me an extra $6-7K essentially doubling my outlay over the prepaid lease. I felt it was a no-brainer and I've seen nothing yet to suggest otherwise. I may not own the system at the end of the lease but I will have had in effect, a 17% tax free return on my investment over those 20 years. At that point they can remove it and take it to the landfill for all I care although I'm betting they'll just abandon it as uneconomic to remove and resell.

I agree with Ian. Leasing a car is something people do when they want to drive a nicer, newer car than they can actually afford. With solar, in certain parts of the world with lots of sun and expensive, increasing electricity costs, leasing solar makes economic sense no matter what your financial situation happens to be. When your monthly cash outflow for the solar lease plus any residual electricity is less than what you're currently paying directly to the electric complany, it makes all the sense in the world to strongly consider going forward. If electricity continues to increase as has been the case in Southern California, the picture looks better as time goes by. And I don't want to get into a green debate here (I have enough with my green wife), but even breaking even has its benefits to the environment.

To make a blanket statement saying that people shouldn't lease/finance solar and that they should purchase it outright or forget about it is doing the whole community a disservice. Every situation is different and deserves a measured response, not generalizations about how bad it is to be in debt.

[Noob]

lol!

You really should check it though. I know his was called a "PPA" and not a lease, but in that contract proposal someone posted in another thread via Dropbox, it was clear that the service contract would be RENEWED at the end of the term if the lessor does nothing. You might actually have to proactively do something at the end of your term?

Probably not though; I'm sure that would have stuck out to you.

[Ian S]

You really should check it though. I know his was called a "PPA" and not a lease, but in that contract proposal someone posted in another thread via Dropbox, it was clear that the service contract would be RENEWED at the end of the term if the lessor does nothing. You might actually have to proactively do something at the end of your term?

Probably not though; I'm sure that would have stuck out to you.

Yes, there are several options and if you want to buy or have them remove the system you have to let them know within a certain timeframe. But honestly, by lease end, I'll be in my 80's and probably moved to Sun City! From the lease contract:

When this Lease reaches its scheduled end of the Lease Term, you may: (1) purchase the System as described in Section 1 of this Lease under the heading “Purchase Option at End of Lease Term and One-Time Early Buyout Option” and Section 8 of this Lease under the heading “Purchase Options”; (2) renew this Lease if at least 60 days but not more than 180 days before the scheduled end of the Lease Term you send us a written request that we renew this Lease for an additional period of time on then prevailing market terms (and taking into account the condition of the System); or (3) upon notice to us, request that we remove the System. If you request that we remove the System, we will do so within ten (10) business days of your request. However, we may choose not to remove the System and if we notify you in writing that we have made such a choice, you will be considered to be the new owner of the System and the System will automatically be conveyed to you AS IS, WHERE IS (and you may be responsible for payment of sales taxes or other taxes, fees or charges, if any, imposed by governmental authorities in connection such transfer of the System). In addition to the foregoing, if you do not purchase the System or renew this Lease as provided in clauses (1) and (2) above, respectively, and do not request that we remove the System, this lease shall, unless we notify you otherwise (which we will have the right to do in our sole discretion) continue on a month-to-month basis, at a monthly rent equal to the last applicable Monthly Payment during the regular Lease Term (or, in the event rent was paid through a Full Prepayment Amount, the monthly rent will be in an amount provided by Lessor). You understand, however, that we may terminate any such month-to-month rental at any time in our sole discretion and notify you that we will remove the System within ten (10) business days such notice to you. You will not in the case of such month-to-month rental have the right to purchase the System or renew this Lease without our express written consent, which we may withhold for any reason.