Solar documents and folders laid out on a desk

The three agreements, side by side

  • Solar loan. You own the system. You owe a lender the loan balance, with interest, often over 10 to 25 years. The tax credit, if any, belongs to you.
  • Solar lease. A company owns the system. You pay a fixed monthly amount to use it, sometimes with an annual increase. The company keeps any tax credit.
  • Power purchase agreement (PPA). A company owns the system. You pay for the electricity it produces, at a price per kilowatt-hour, often with an annual increase.

Clues on your paperwork

  • A loan shows an annual percentage rate (APR), a finance charge, an amount financed, and a Truth in Lending disclosure box. The statement shows a principal balance.
  • A lease shows a monthly payment for the equipment and may be called a lease, a residential solar lease, or a monthly payment agreement.
  • A PPA shows a rate per kWh and a bill that changes with how much the system produced.

Your monthly statement is the quickest check. If it shows a balance going down, you likely have a loan.

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Why it matters for getting out

With a loan, the exits are payoff, refinance, sale, or a claim, and the lender is usually a separate company from the installer. With a lease or PPA, the exits are buyout, prepayment, transfer, or a claim, and you deal with the system owner. Cancellation and misrepresentation rights can apply to all three, but some state laws cover only purchases. Colorado’s 2025 solar law, for example, gives its cancellation right on purchases but not leases or PPAs.

The filing on your property record

For all three, the lender or owner often records a UCC-1 fixture filing, a public notice that it has an interest in the equipment. It is not a mortgage, but it can come up in a title search when you sell or refinance. Companies generally release or pause it on request, sometimes for a fee, when a sale or refinance closes.

Common questions

My contract says "loan" but the installer bills me. Which is it?

Look for the lender name on the loan documents and the Truth in Lending box. The installer may have arranged the loan, but a separate company usually holds it.

Does a lease or PPA affect selling my home?

It can. The buyer may need to qualify and agree to take it over, or you may need to buy it out. Start early.

Is a UCC-1 filing a lien on my house?

It is a notice of an interest in the solar equipment, not a mortgage on the home. It can still need to be cleared before a sale or refinance closes.

Sources

  1. CFPB: Issue Spotlight, Solar Financing (August 2024). How solar loans, leases, and PPAs are structured
  2. FTC: Solar power for your home. Comparing ownership and leasing
  3. Colorado SB 25-299. Cancellation right limited to purchases

General information, not legal advice.

This guide can’t tell you whether a right applies to your agreement. For that, talk with a licensed attorney in your state.