Buyout: Fair Market Value (FMV) Buyout is required at the end of the term. Can be 20% or more
Transfer: New Owner credit checks. Lease holder determines their best financial position
Savings: The finance company gets all available financial incentives with many of them upfront
Buyout: At the end of your loan term there are no further payments or costs
Transfer: Property taxes transfer to the new owner per local existing tax laws
Savings: You receive available financial incentives
The two most common forms of home improvement financing are: 1) Property Tax Loan (Property Assessed Clean Energy PACE); and 2) Personal Lease Financing (Home Improvement Lease Financing).
The main practical distinction between buying with a loan and renting with a lease is in ownership. If you buy your home improvements, you own the system, either outright (if purchasing with cash) or after repaying your property taxes. If you lease the system, a third party owns the solar panel system. This distinction impacts the cost, maintenance, terms, financial offsets, and savings/returns on investment of your home improvement.
With a Personal Lease Financing … who owns your original lease after several years have gone by? IT IS likely your original personal lease will have been sold one or more times to an outside investor and/or foreign finance company. You have no guarantee that the original company you financed with will be the one you deal with later on when you go to sell your property.
NOT ZERO DOWN: A personal lease is not zero down because the leasing company is taking all of the upfront instant rebates and tax credits.
LIABILITY: A personal lease shows up on your credit check because you personally are liable … compared to property tax financing where the financed amount won’t appear on credit report
NO TAX DEDUCTIONS: IRS rules do not allow you to write off your these payments
Why take such an necessary risk … when Property Tax Loan financing insures that you have none of these hassles if you sell or move. You personally don’t take out the loan. Payments are made each year by adding the loan amount to your property taxes