Understanding your quick financing ranking
The order you'll almost always see
Cash is almost always cheapest, followed by a loan, with third-party financing like a PPA or lease usually costing the most over 10 years. On a $145,000 system with a $2,000 monthly bill, cash nets to about $70,688, a 10% down 7% loan nets to about $122,013, and third-party financing runs about $223,374 over the same period. The gap between cash and the other two options is almost entirely the ITC and depreciation, which cash captures in full and financing shares away in different forms. If you want to model loan terms specifically, the loan term comparison tool in our financing section breaks down APR and term-length tradeoffs in more depth. A size estimate is only half the decision for a business. The loan payment calculator in our Financing section can help you work out which way to pay for the system costs less.
Why cash wins, and what that doesn't tell you
Cash avoids both loan interest and the tax benefits a third-party financier would otherwise keep for itself, so it captures the full value of the ITC and depreciation with no financing cost layered on top. The tradeoff is the large upfront outlay, which this quick comparison doesn't weigh against your cash position. NREL's Understanding and Evaluating Solar Financing and Ownership Options report goes deeper into exactly why third-party ownership tends to cost more, tracing how tax benefits and cash flows split between local owners and outside investors. Check the loan vs. cash comparison for the opportunity-cost version of this tradeoff.
The assumptions baked into this quick version
This tool assumes a standard 30% ITC, 100% bonus depreciation, a 25% combined tax bracket, a 10-year loan term, and a third-party rate set at 85% of your current bill with 2% annual escalation. Change any of these and your actual ranking could shift, especially between the loan and third-party options, so treat this as a starting point rather than a final answer. The Department of Energy's guide to going solar covers these same ownership tradeoffs in more general terms if you want a broader starting point.
When to move to the detailed tools
Use this quick tool for an early gut check on financing direction, then move to the detailed loan vs. cash, PPA vs. ownership, or lease vs. loan comparisons once you have real quotes and want your specific numbers instead of these built-in assumptions, and the quick financing comparison tool runs this same three-way comparison from a residential angle if that scale is a closer match to your situation.