SunCap Financial Lease, too good to be true?

[russ]

The leasing company gets all the tax breaks you can avail plus depreciation and I don't know what else.

The system just plain costs them less though all tax payers make up the difference.

At the end of 20 years you own nothing with a lease unless it is stipulated otherwise in the original contract.

If you can front the money buying will be better for you in every case I have seen.

[KRenn]

Hi Russ - I have a question for you. What is the point of a prepaid lease? If you can prepay for a lease, wouldn't it make more sense to just buy the equipment outright? Unless the benefits of having the leasing company be responsible for maintenance, etc., I don't understand how leasing is a benefit.

Also, if the leasing company owns the equipment for the duration of the lease - what happens at the end of a 20 year prepaid lease? Do you then automatically own the equipment?

Jen.

The prepaid lease provides insurance, purchasing you have to provide your own.

The prepaid lease provides full warranty for 20 years, most inverters have a 10 year warranty and a 12-15 year lifespan, meaning if you purchase, you have to replace the inverter yourself, if you do a prepaid lease, the leasing company does it for you.

After 20 years, you can buy the equipment at what is known as FMV(fair market value), or have the leasing company remove it at no charge.



There's definitely benefits to the prepaid lease, the pricepoint seems to be the main one. If you can do a prepaid lease for a 5kW for 20 years and pay $5,000, or have to pay $20,000, get taxed on any utility rebates, have to provide your own insurance and then replace the inverter after 12-15 years, you can easily see how some people would say screw it and just do the prepaid option.

[KRenn]

Hi Jen
The point of the prepaid lease is you have a smaller up front cash outlay.
They will maintain the equipment for the duration of the lease at no cost to you.
There are options at the end to either purchase at fair market value, extend the lease or have the system removed.
Purchasing the system will generally be a better return than leasing if you have the cash to purchase and wait or the incentives and savings come back to you.

I concur with this. The ROI works this way from best to worst.


Purchase>>>>>Prepaid>>>>>Monthly Lease with Zero Escalator>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>Monthly Lease With Annual Escalator



If you have the cash or can get a home equity loan, purchasing is great because it allows you more options, the ability to expand the system and so on, but if you're just looking to save and put the minimal money out of pocket possible, prepaid lease is the way to go.


If you're not looking to put any money down, then monthly lease with no escalator is the way to go and if financially you're an absolute moron, then a monthly lease with a built-in escalator is the way the idiots go.

Leases with escalators will almost always have lower initial prices than a non-escalator lease but after year 3 or 4, you've already exceeded that price and over 20 years you'll pay anywhere from $6000 to $20000 more if you have an escalator in the lease.

[KRenn]

He hasn't done much looking. While he's got some agenda to push against leasing, it's an excellent choice for the right person. It all depends on your situation. And the value of 20 year old panels is very suspect at best. Russ just got finished saying in a thread he closed because he didn't like being challenged that "maybe" these 20 year old panels will have some value in 3rd world countries! So the leasing company has to pay a lot of money to remove the system from your home, guarantee the seal, then find a buyer in a third world country to sell the panels to and make a profit on what they spent to remove the system. Don't bank on these things having much real value to the leasing company after 20 years.

Don't count on them having no value to them either. In 20 years these modules will still have 5 years of warranty. Removing those panels and sealing the roof can done in 1-2 days with a 2 man crew costing less than $1000. At that point the companies can simply donate those panels to charity, utilizing fair market value and get a writeoff that could be anywhere from 2-5 times what it cost them to remove the panels and reseal the roof.


Also when they reseal, they're only guaranteeing it for a single year and within 1-3 inches of the original insert points, not a huge leap of faith there as long as they put the most basic of effort into resealing.

Multiply that by a few thousand systems and you can see why it would make sense for these companies to go back and retrieve their property.


I have no problem with solar leasing, it can make solar accessible for a lot of people but I also don't buy into empty words from salespeople.



"Oh yeah, NOBODY will want those panels after 20 years." Either put that in writing or cut the crap and stop BSing me.

[russ]

He hasn't done much looking. While he's got some agenda to push against leasing, it's an excellent choice for the right person. It all depends on your situation. And the value of 20 year old panels is very suspect at best. Russ just got finished saying in a thread he closed because he didn't like being challenged that "maybe" these 20 year old panels will have some value in 3rd world countries! So the leasing company has to pay a lot of money to remove the system from your home, guarantee the seal, then find a buyer in a third world country to sell the panels to and make a profit on what they spent to remove the system. Don't bank on these things having much real value to the leasing company after 20 years.

I didn't close the thread - I said I would if you kept up the nonsense. Being challenged? Not really - you are just spouting nonsense that you are dreaming up as you go - that is not a challenge.

You are newly looking at this end of lease scenario - some of us have been with it for a couple of years now. There is a lot of salesman's blather flying around mixed with a few facts.

Removing the system from the roof - no big deal - a couple of hours work. They will do it quickly and efficiently. You can patch a roof with bubble gum and have it last for some time. Trying to get anyone to come back for repair will probably be a bit difficult.

These panels will have value anywhere I expect - you could find many buyers in the US today - anyone wanting a system but not liking the large outlay of a new system. People that want the 'bling' value to show off to their neighbors will not want them. The other 90% of the population may well be interested.

What will determine the panels value after 20 years 1) output, 2) any damage and the biggie 3) the cost of a new panel. If new panels are cheap at that time the old panel will be low. If new panels are costly then ---

[orchid]

Though I'm normally always a person who thinks buying versus leasing is a better idea I can't seem to find the downside to a lease in our situation. Maybe I'm not looking at everything though? Due to our low tax liability and some other credits we will be taking in the few years I wouldn't qualify for the federal tax rebate. I can get a prepaid lease through suncap for a 8.4 kwh system for $9300. For 20 years worth of solar power that seems like a good deal to me.

[s.xavier]

That's funny because I've always been the same way. I've never leased a car in my life. But I have bought a car and ended up selling it years later and spent more than I would have to lease it when all was said and done. This time around I'm 6 years into the car with really no repairs and I'm making out better.

My tax situation was similar. I have a low Federal tax liability due to all my deductions and I would have had to carry the credit over for a number of years to get that money back. Eventually it would have happened, but the gov't would have held my money for years with obviously no interest being paid on it. I just didn't feel like handing over the $10k for a few years.

leasing will always come down to the individual and what options they have..... for those who cannot afford to pay up front for a solar system then leasing may be suitable to them. if you have the financial resources then leasing can add value or may not add value... if you have the money but want a complete solution then buy it outright for maximum roi....

Sunking is right and im sure everyone who ever dealt with a lease will tell you that leases suck in maximizing roi... its a fact, otherwise why would a company offer a lease? comon its not rocket science

[KRenn]

Though I'm normally always a person who thinks buying versus leasing is a better idea I can't seem to find the downside to a lease in our situation. Maybe I'm not looking at everything though? Due to our low tax liability and some other credits we will be taking in the few years I wouldn't qualify for the federal tax rebate. I can get a prepaid lease through suncap for a 8.4 kwh system for $9300. For 20 years worth of solar power that seems like a good deal to me.

Suncap provides a very good lease. The biggest benefits to any prepaid program is the full insurance and the warranty, literally unless you go out and mess with the panels yourself, you're covered for basic everything. That value can't be discounted either when it comes to a discussion of purchase vs lease.

If you have very low tax liability, then purchasing really wouldn't make sense if you have to wait 3-4 years to get your tax credits back again. A worry-free 8kW for $9300 makes your ROI about 4 years, depending on your roof orientation.

If you don't decide to keep the system, then you've basically still racked up 16 years of profits, so I can understand that side of the argument very well.


In your case I can see the argument, but it also depends on what sort of equipment the installer is giving you. That has to play a part in any decision. I'd look differently if I was getting say.....Jinko modules vs a higher quality brand like Schuco or Sanyo.

[orchid]

If you have very low tax liability, then purchasing really wouldn't make sense if you have to wait 3-4 years to get your tax credits back again. A worry-free 8kW for $9300 makes your ROI about 4 years, depending on your roof orientation.

If you don't decide to keep the system, then you've basically still racked up 16 years of profits, so I can understand that side of the argument very well.

In your case I can see the argument, but it also depends on what sort of equipment the installer is giving you. That has to play a part in any decision. I'd look differently if I was getting say.....Jinko modules vs a higher quality brand like Schuco or Sanyo.

We figured our ROI would be just under the 4 year mark if we decide to go with the Suncap lease we have been quoted. They will be on the south east facing side of our house. The panels are Schuco MPE 235 PS 09 which seem to be good quality. We are also looking at a Sunpower lease too which is close to the same price but with SunPower E18/230 Solar Panels. Sunpower also offers a buyout option at the end of year six for $1070 if you want to purchase the system at the point instead of continuing the lease. This would be cheaper then buying it upfront especially considering we really can't take advantage of the federal tax credit while they can.

[Ian S]

We figured our ROI would be just under the 4 year mark if we decide to go with the Suncap lease we have been quoted. They will be on the south east facing side of our house. The panels are Schuco MPE 235 PS 09 which seem to be good quality. We are also looking at a Sunpower lease too which is close to the same price but with SunPower E18/230 Solar Panels. Sunpower also offers a buyout option at the end of year six for $1070 if you want to purchase the system at the point instead of continuing the lease. This would be cheaper then buying it upfront especially considering we really can't take advantage of the federal tax credit while they can.

I've been looking seriously for three months now and am close to deciding on a prepaid lease. I'm not sure it's been discussed but one of the reasons a prepaid lease looks so attractive compared to outright purchase is that the lessor can take advantage of accelerated depreciation of the entire cost and that's over and above all the tax credits and utility incentives. Individual owners generally can't do that. It's also why SunPower offers the 6 year buyout option - they've milked the tax preferences for all they can get at that point in time and they would prefer you buy the system so they won't be on the hook for maintenance and insurance for the remainder of the 20 year lease. I also have quotes from SolarCity, Sungevity, SunRun and a local firm that's been in the business for more than two decades. I have read through all of the leases and the idea that the company will be at all interested twenty years from now in tearing off your ancient system, packing it up and shipping it off to someone far away who then has to pay to install it all over again borders on the preposterous. One of the contracts I'm considering actually as much as admits that as their buyout price at lease end is stipulated at $1.00. I suspect the reason they are cagey about the buyout is that if they try to do a lease-to-purchase, my utility will demand a W9 tax form from me and not the lessor so they might lose out on the tax advantages.

[KRenn]

I've been looking seriously for three months now and am close to deciding on a prepaid lease. I'm not sure it's been discussed but one of the reasons a prepaid lease looks so attractive compared to outright purchase is that the lessor can take advantage of accelerated depreciation of the entire cost and that's over and above all the tax credits and utility incentives. Individual owners generally can't do that. It's also why SunPower offers the 6 year buyout option - they've milked the tax preferences for all they can get at that point in time and they would prefer you buy the system so they won't be on the hook for maintenance and insurance for the remainder of the 20 year lease. I also have quotes from SolarCity, Sungevity, SunRun and a local firm that's been in the business for more than two decades. I have read through all of the leases and the idea that the company will be at all interested twenty years from now in tearing off your ancient system, packing it up and shipping it off to someone far away who then has to pay to install it all over again borders on the preposterous. One of the contracts I'm considering actually as much as admits that as their buyout price at lease end is stipulated at $1.00. I suspect the reason they are cagey about the buyout is that if they try to do a lease-to-purchase, my utility will demand a W9 tax form from me and not the lessor so they might lose out on the tax advantages.

Most likely from a local installer who won't be around to honor that buyout or the warranty. The only ones I've seen offer it for a dollar are local installers, demanding 50-100% upfront and taking 4-10 months to install.

[KRenn]

Unfortunately KRenn talks out of both sides of his mouth so you have to discount everything he says. He posts in other threads how horrible pre-paid leases are, and how the leasing companies will all refuse to do repairs, they won't let you sell your home unless you give them your first born child.. loads of BS. Yet here he actually posts something semi-intelligent. You really can't give it much credit as in 10 minutes he'll be posting the opposite info somewhere else.

Talk to a person who actually has signed a pre-paid lease and is involved with one. Not somebody who honestly doesn't know what they're talking about. If this yahoo bought a system, he's qualified to talk about buying a system. Anything besides that take it with a grain of salt.

A. I'm always in favor of buying, period. With a lease you can't customize anything on that system or upgrade it, adding more panels down the road.

B. In a situation where someone has limited tax liability, a prepaid lease is the way to go.

C. In a case where someone has good credit but little cash to put down, a month-to-month with zero escalator is the way to go.


As far as end of lease term, someone is coming for those panels, if for nothing less than the writeoff. Too many systems installed for it not to happen, even if they can only get $500 after all expenses, that is still $500 times thousands of systems.

[KRenn]

We figured our ROI would be just under the 4 year mark if we decide to go with the Suncap lease we have been quoted. They will be on the south east facing side of our house. The panels are Schuco MPE 235 PS 09 which seem to be good quality. We are also looking at a Sunpower lease too which is close to the same price but with SunPower E18/230 Solar Panels. Sunpower also offers a buyout option at the end of year six for $1070 if you want to purchase the system at the point instead of continuing the lease. This would be cheaper then buying it upfront especially considering we really can't take advantage of the federal tax credit while they can.

Well that is where Sunpower got clever. At year 7 that system is becoming more of a liability to them so once they clear it off their books they don't have to worry about replacing inverters and anything else that might happen as the system ages. Suncap is on the hook for the full thing for 20 years.

Both Schuco and Sunpower are very good quality panels, especially for the kind of pricing you're looking at. Both should give you about equal production. Since you live in Arizona, I'd be looking at Solar Edge or Power-One inverters since both seem to do pretty well in the crazy heat.

[Naptown]

Well that is where Sunpower got clever. At year 7 that system is becoming more of a liability to them so once they clear it off their books they don't have to worry about replacing inverters and anything else that might happen as the system ages. Suncap is on the hook for the full thing for 20 years.

Both Schuco and Sunpower are very good quality panels, especially for the kind of pricing you're looking at. Both should give you about equal production. Since you live in Arizona, I'd be looking at Solar Edge or Power-One inverters since both seem to do pretty well in the crazy heat.

Actually for systems installed this year the remaining after the Fed credit can be deducted as depreciation. Next year 50% and remainder on a 5 year schedule
Therefore if they sold you the system after it was depreciated they would actually be liable for recapture of the depreciation as a capitol gain.
Following this to its likely conclusion the leasing companies have a few options in my opinion.
Leave the system there as removal costs Plus the recapture of the depreciation would be more than the system is worth.
Offer a buyout for a dollar to avoid the recapture of the depreciation.
Or and this is the one I think will happen.
The leasing companies will belly up right after 2016 when the credits run out. They have gotten your money, the federal credits, and have depreciated the systems down to nothing. If it is a prepaid lease you may not have much to sweat out other than the 20 year insurance and warranty are gone. If it is a monthly lease the courts will continue to collect the accounts receivable but the warranty you bought will most likely be gone and you are still looking at inverter replacement.
I apologize for the nay saying but I have lived through the last solar boom and bust and witnessed firsthand how the big corporate players deal with a losing proposition. They run as far and as fast as possible.

[KRenn]

Actually for systems installed this year the remaining after the Fed credit can be deducted as depreciation. Next year 50% and remainder on a 5 year schedule
Therefore if they sold you the system after it was depreciated they would actually be liable for recapture of the depreciation as a capitol gain.
Following this to its likely conclusion the leasing companies have a few options in my opinion.
Leave the system there as removal costs Plus the recapture of the depreciation would be more than the system is worth.
Offer a buyout for a dollar to avoid the recapture of the depreciation.
Or and this is the one I think will happen.
The leasing companies will belly up right after 2016 when the credits run out. They have gotten your money, the federal credits, and have depreciated the systems down to nothing. If it is a prepaid lease you may not have much to sweat out other than the 20 year insurance and warranty are gone. If it is a monthly lease the courts will continue to collect the accounts receivable but the warranty you bought will most likely be gone and you are still looking at inverter replacement.
I apologize for the nay saying but I have lived through the last solar boom and bust and witnessed firsthand how the big corporate players deal with a losing proposition. They run as far and as fast as possible.

Depends on the company. Both Sunpower and SunCap are pretty credible entities as far as things go. One is a massive solar installer, albeit one that was rumored to have had some financial difficulties and was bought out by a French company but still a a major force in the solar industry, a company with considerable government and municipal contracts and the other is an affiliate of a massive Fortune 500 utility company. Anything can happen obviously but unlike the last solar boom, this one seems to be far more prevalent and sustained. Wouldn't feel too risky rolling the dice on either one though to be honest, especially with the pricing the other poster is describing.

I'm more worried about the companies whose financial existence is primarily determined by solar leasing...namely the Solar City's, Sungevity's, these are entities that didn't exist about 5 years ago and would be the ones I imagine would have the fastest fallout once the incentives vanish. The worst is the small-time installers who are offering their lease packages with un-insured warranties, no production guarantees.....those you might as well buy assuming that you're going to be doing all the repair work on the system out of your own-pocket if it exceeds the manufacturer's warranty limitations.