Solar Loan vs. Lease vs. PPA: What Kind of Solar Contract Do You Have?
Your legal rights, tax credit eligibility, and cancellation strategy depend entirely on which of these three contract structures you signed.
Contract Structure At-A-Glance
| Feature | Solar Loan | Solar Lease | Solar PPA |
|---|---|---|---|
| Equipment Ownership | Homeowner | Solar Company | Solar Company |
| Federal Tax Credit (ITC) | Homeowner Claims | Lessor Claims | Lessor Claims |
| Annual Price Escalator | Fixed Monthly Rate | Often 2.9% - 3.9%/yr | Often 2.9% - 3.9%/yr |
| Home Sale Impact | Loan Payoff at Closing | Buyer Assumes Lease | Buyer Assumes PPA |
| Primary Lenders/Lessors | GoodLeap, Mosaic, Dividend | Sunrun, SunPower | Sunrun, Tesla, Palmetto |
1. Solar Loans & The Hidden "Dealer Fee"
With a solar loan, you own the equipment from day 1. However, lenders routinely work with sales dealers to add 15% to 35% "dealer origination fees" to the principal balance of the loan to advertise an artificially low interest rate (e.g. 1.99% or 2.99%).
If this fee was concealed in the cash price or misrepresented on your TILA disclosure statement, you may have grounds for a Truth in Lending Act rescission claim.
2. Solar Leases & PPAs: The Escalator Trap
In a solar lease or Power Purchase Agreement (PPA), you do NOT own the solar panels. The solar company owns the equipment, collects the federal 30% tax credit, and charges you a monthly payment or per-kWh rate.
Most leases and PPAs contain an annual 2.9% escalator clause. Over a 25-year contract term, a payment that starts at $150/month balloons to over $300/month—frequently exceeding utility grid electric rates.
Need Help Analyzing Your Contract Type?
Elite Solar Recovery provides a free document review to identify your exact contract structure and legal cancellation pathways.
Sources & References
Every claim on this page is sourced from public records, court filings, regulatory announcements, or federal law. Review the primary sources below.
- 01FTC Holder Rule — 16 C.F.R. § 433 (Full Text)
The federal regulation requiring the preservation of consumer claims and defenses against loan holders.
- 02FTC Staff Issues Note on Holder Rule for Large Transactions (April 2021)
FTC guidance confirming the Holder Rule applies to solar and other large financed purchases.
- 03IRS — Residential Clean Energy Credit
Federal tax credit eligibility, carryforward rules, and system timing requirements.
- 04FTC — Truth in Lending Act (TILA) Overview
Federal disclosure requirements for consumer credit contracts including solar loans.
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