Solar Loan vs. Lease vs. PPA: Cancellation and Financial Obligations

How do a solar loan, lease and PPA differ?

Solar loan vs lease vs PPA comes down to who owns the panels. With a solar loan you own the system and repay a lender; with a lease you pay a monthly amount to use panels a company owns; with a power purchase agreement (PPA) you buy the electricity those company-owned panels produce, priced per kilowatt-hour. Ownership drives the tax credit, the filings, the cancellation and Holder Rule protections, and how each contract ends.

A solar loan is consumer credit used to buy a system, often from a lender other than the installer; the CFPB says solar-specific loan terms typically range from 8 to 25 years.

A solar lease is a contract to pay a company monthly for the use of a system it owns on your roof; the CFPB says typical leases run 15 to 20 years.

A PPA is a contract to buy the system’s output at a set rate; the CFPB says typical PPAs run six to twenty-five years.

Solar loan vs lease vs PPA: the comparison table

	Solar loan	Solar lease	PPA
Who owns the system	You	The leasing company	The PPA company
Who got any tax credit	You, if the system was placed in service by December 31, 2025 (the credit is nonrefundable, with unused amounts carried forward); none after that	The company, as owner	The company, as owner
What you pay	Fixed installments on a principal that may include a dealer fee	A monthly payment to use the system	A per-kWh price for the power produced
Escalators	None on a fixed-rate loan, but the payment can reset higher around the 18th or 19th month without a large prepayment	Many leases rise each year by a set amount	Some rates are fixed; others rise 1 to 5 percent a year
What gets filed	Often a UCC filing on the panels (a county fixture filing or a UCC-1 with the state); a mortgage or deed of trust if a home equity loan or HELOC paid for it; nothing if unsecured	Often a “precautionary” UCC filing claiming the equipment	Often a “precautionary” UCC filing claiming the equipment
FTC Cooling-Off Rule	Generally covers the installation sale made at your home; a loan secured by your home gets TILA’s rescission right instead	The rule’s text covers “a sale, lease, or rental”	No agency has said whether it applies
FTC Holder Rule	Covers seller-arranged and purchase-money loans; recovery capped at amounts paid by the debtor	No agency has applied it	No agency has applied it
Transfer at sale	Pay off at closing, or the buyer assumes it if the lender permits	The buyer takes it over if the contract allows, you keep paying, or you buy it out	Same as a lease, on the PPA’s terms
End of term	You own the system outright	You don’t automatically own it; buy at fair market value or the company removes it, per the contract	You don’t automatically own it; buy at fair market value or as the contract says
Exit options	Payoff, refinance, payoff at sale, a dispute or Holder Rule claim	Buyout, early termination, transfer, a dispute	Buyout, early termination, transfer, a dispute

Who owns the panels, and who got the tax credit?

The IRS says installations “must be owned (not rented or leased) by the taxpayer who claims the tax credit.” Treasury’s advisory says that for leases and PPAs, “The tax credits and incentives go to the system’s owner,” and its lease guide calls the pitch that a lessee can use tax credits to reduce the cost a lie.

For owners, the window has closed: the IRS says the residential clean energy credit “is not available for any property placed in service after December 31, 2025.” If you were promised a credit you couldn’t get, see solar tax credit misrepresentation.

What do you pay, and can it go up?

Loans. The CFPB calls the most common solar financing “fixed-term, usually fixed-rate installment loans,” and found hidden dealer fees that “typically range from between 10 to 30 percent of the cash price but can exceed 50 percent.” It also found it “commonplace” for solar-specific loans to re-amortize to a higher payment unless the borrower makes a large prepayment, often sized to the expected tax credit. The spotlight puts the reset at the 19th month and the CFPB’s 2024 advisory says “after 18 months,” so look around the 18th or 19th month. See solar dealer fees and payment increases.

Leases. The CFPB says “in many cases the payments increase each year by a predetermined amount.” California’s regulator puts typical lease and PPA escalators at 1 to 3 percent a year and says to “Be cautious” of higher ones.

PPAs. The CFPB, citing the EPA, says PPA escalators “range from 1 to 5 percent,” and some PPAs keep a fixed rate.

What gets filed against your home?

A UCC-1 financing statement is the form a creditor files to claim an interest in personal property, such as solar equipment. A fixture filing is a UCC financing statement recorded in the county real property records; it covers the panels, and a title search finds it. A mortgage or deed of trust is a lien on the house itself. A PACE assessment is a property tax lien.

The CFPB says lenders commonly file UCC liens on the panels, and quotes the Center for Responsible Lending that such a lien is “technically not on the property, but it can muddy the title.” Lessors file too: Fannie Mae calls a lessor’s filing that describes only the equipment a “precautionary” UCC filing and says it is “acceptable (and a minor impediment to title).” See solar liens and UCC filings.

Which cancellation rights apply to each?

Cancellation is never automatic; it depends on the contract type, the dates, your state and the facts.

The FTC’s Cooling-Off Rule requires a seller to tell you that you “may cancel this transaction at any time prior to midnight of the third business day,” and Saturdays count as business days. The rule generally covers a solar sale or lease made at your home. No agency has said whether it covers a PPA, although all three Treasury guides, including the PPA guide, say the right to cancel “lasts for at least three days from the date it is signed.” Under the rule, the seller also may not assign your note to a finance company before midnight of the fifth business day.

Credit secured by your principal dwelling, such as a home equity loan, a HELOC, or PACE under the CFPB rule effective March 1, 2026, carries the Truth in Lending Act’s three-business-day right to rescind, extended up to three years if the required notice or material disclosures were missing. A solar-specific loan secured only by the panels usually does not: Regulation Z leaves incidental fixture interests out of “security interest,” and the Eleventh Circuit held in Lankhorst, a non-solar case, that a fixture security interest is not a security interest in the home. Read the security section of your loan to see whether it reaches the house.

State windows vary and can run longer. Texas gives five business days for residential solar purchases and leases signed on or after September 1, 2025, and the contract must require an affiliated or referred lender to cancel the loan when the solar contract is cancelled. Check the state table and the deadline tool.

Does the Holder Rule cover a loan, a lease or a PPA?

The Holder Rule is the FTC rule that puts a notice in seller-arranged consumer credit contracts. It says any holder “IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER,” and that recovery “SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.” Look for it in your loan contract. No agency has applied it to a lease or PPA, so on those contracts your claim runs against the company on the contract or the servicer that took it over.

What happens when you sell the house?

With a loan, the CFPB describes two usual paths at sale: payoff before closing, or a buyer who takes over the loan “if permitted by the lender.” For leases and PPAs, California’s guide lists three usual paths: the buyer takes over the agreement, you keep paying, or you buy it out. Fannie Mae counts lease payments in a buyer’s debt-to-income ratio unless the lease meets a production-guarantee test, and lets lenders exclude PPA payments based solely on the energy produced. See selling with a solar lease and selling with a solar loan.

How does each contract end?

When a solar loan on consumer goods is paid off, UCC 9-513 requires the lender to file a termination statement within one month, or within 20 days after your signed, written demand if that comes first. For a lease, Treasury says you “do not automatically own the system,” while the FTC says the company “must remove the system and put your roof back in its original condition.” Treasury’s PPA guide says you “will need to purchase it” at fair market value. The agencies differ, so your contract decides.

Notes on cash purchases and PACE

Cash. Treasury says buying means you “pay the entire cost.” With no lender, the Holder Rule has nothing to attach to; claims run against the installer, and against manufacturers for equipment defects. The Cooling-Off Rule generally covers a cash sale made at your home.

PACE. PACE financing is repaid as an extra amount on your property tax bill. Treasury: “A property tax lien for PACE financing takes priority over your mortgage.” The CFPB says the obligation “is tied to the property, not the property owner,” and FHFA says a homeowner with a first-lien PACE loan “cannot refinance their existing mortgage with a Fannie Mae or Freddie Mac mortgage.” The CFPB reported that PACE loans raised borrowers’ property taxes by about $2,700 a year, an 88 percent increase.

What should you do first, whichever you signed?

1. Inside a cancellation window? Send a written cancellation now, using the method your contract and the law call for, and get a copy to the lender that day.
2. Identify your contract and every company: the type, then the installer, lender, servicer and warranty provider, which may be four different companies.
3. Ask in writing, and complain for free. For a system you bought, the FTC says: “If you have a problem with a system you bought, try to resolve it with the company first.” The CFPB’s complaint page, which takes solar loan complaints, asks: “Have you tried reaching out to the company?” For leases and PPAs, Treasury, the CFPB and the FTC jointly encourage complaints “with CFPB, FTC, or their relevant state consumer protection office.” Add your state attorney general and contractor licensing board.

Disclosure: Candid Yak works with Titan Advocacy Group, a solar consumer advocacy firm, and may be paid when readers hire it.

4. If they refuse, and the paperwork shows a gap between what the seller promised and what you signed, get a free case review from an attorney-backed firm. A firm worth your time reviews the paperwork before quoting, tells you if a free route is still open, names the attorney licensed in your state who will handle the file, puts its fee and what happens to it after a refusal in writing, never tells you to stop paying, and never promises an outcome or claims ties to your installer or lender.
5. Other routes: a buyout or transfer at sale for a lease or PPA, and a payoff or refinance for a loan, each on the contract’s terms. A consolidation loan can replace a solar loan if the rate works.

Don’t stop paying any of these contracts without professional advice first; the main exit guide covers each route.

Disclosure: Candid Yak works with Titan Advocacy Group, a solar consumer advocacy firm, and may be paid when readers hire it. This page’s author, Kira Fairbank, is a manager at Vacation Ownership Consultants, a timeshare exit firm.

This is general information, not legal advice. Your rights under a loan, lease or PPA turn on the contract’s exact terms, how it was sold and your state’s law, so put the documents in front of an attorney licensed in your state before you send a notice, sign a release, or change any payment.