Loan, lease, or PPA — which do you actually have?
The single most important question is who owns the system on your roof. With asolar loan, you own it — you borrowed money to buy the panels and you're repaying a lender. With a lease or a PPA (power purchase agreement), a company owns the panels and you're paying to use them or to buy the power they make. That one distinction decides who gets the tax credit, what happens when you sell your home, and — most importantly here — how you get out.
Not sure which you have? Check your paperwork for the words "loan," "retail installment contract," "lease," or "power purchase agreement." If you're paying a fixed amount to alender, it's likely a loan. If you're paying a solar company to rent the system or buy its output, it's a lease or PPA.
The three side by side
| Solar Loan | Solar Lease | PPA | |
|---|---|---|---|
| Who owns the system | You do | The provider | The provider |
| What you pay | Loan payments (principal + interest) | Fixed monthly "rent" | A rate per kWh produced |
| Who gets the tax credit | You (if you have tax liability) | The provider | The provider |
| How it's secured | Usually a UCC-1 on the equipment | UCC-1 documenting provider's ownership | UCC-1 documenting provider's ownership |
| Easier to exit at home sale? | Generally yes — pay off & convey | Harder — transfer or buy out | Harder — transfer or buy out |
A UCC-1 fixture filing covers the panels and equipment — like a lien on a financed car — not your house itself. A missed solar-loan payment generally can't trigger foreclosure on your home, but the filing does show up in title work and must be addressed when you sell or refinance.
Rights that apply no matter which you have
Some protections don't care whether you signed a loan or a lease — they depend on how and where you were sold:
The 3-day right to cancel a home sale
If the deal was sold at your home, the FTC's Cooling-Off Rule generally gives you until midnight of the third business day to cancel, with no penalty. It covers a "sale, lease, or rental," so it reaches solar loans and leases alike. Many states layer their own home-solicitation protections on top, and some give seniors additional days.
Missing or defective cancellation notice
The seller has to hand you a completed written Notice of Cancellation and tell you about your right to cancel. If they didn't, that's a violation — and it can keep your practical cancellation window open past the normal three days.
Misrepresentation at the point of sale
"Free panels," a guaranteed savings number, a disappearing electric bill, a "government program," or a tax credit pitched as guaranteed regardless of your tax situation — if the pitch didn't match the contract, a deal induced by false promises can be challenged whether it was financed as a loan or a lease. In August 2024 the CFPB specifically flagged exaggerated-savings and misleading tax-credit claims in solar financing.
How getting out differs: loan vs. lease
If you have a loan
Because you own the system, your exits run through the lending: disputing undisclosed dealer fees, misrepresentation, or Truth in Lending Act problems. A word of caution on TILA rescission — it applies only when the loan is secured by your principal dwelling. Many solar loans are "unsecured" or secured only by a UCC-1 on the equipment, and whether that qualifies is fact-specific and unsettled. It's a real remedy in the right case, but it is not the automatic escape hatch it's sometimes made out to be.
If you have a lease or PPA
There's no loan-disclosure hook, so exits are contractual or performance-based: buy outthe contract at its stated price (often the net present value of what's left), transferit to a qualified buyer when you sell, or show the provider breached — a system that never produced the promised output, or that wasn't maintained as agreed. Which path is realistic depends on your contract's exact terms and your state's law.
Dealer fees: mostly a loan problem
The biggest financing scandal in residential solar centers on loans. In its August 2024 issue spotlight, the CFPB found lenders frequently add markup or "dealer" fees that can push the financed amount more than 30% above the system's cash price — often without disclosing the markup. That's the same conduct the Minnesota Attorney General sued four major solar lenders over in 2024, alleging roughly $35 million in hidden fees across nearly 5,000 loans. If a large fee was buried in what you financed, that's frequently the strongest thread to pull.