Homes in Singapore are typically expensive, and the last thing homeowners want to do is spend unnecessarily more on additional features they may or may not need. Residential solar panels have been gaining popularity in recent years as they help slow the process of global warming whilst enabling homeowners to cut down on electricity bills. The caveat is that solar panels are expensive to install, making the prospect of owning them off-putting. The good news is that affordable plans such as solar loans and solar leases are being introduced to lower the initial costs required to install solar panels in Singapore. If you’re considering installing solar panels on your home, here are some key differences between these two popular financing options to help you decide what works best for you.
A solar loan is exactly as its namesake suggests — a loan taken out for the purchase and installation of solar panels in Singapore. This tends to be a flexible financing option that comes in varying payment structures, interest rates, and term lengths. In order to encourage more households to adopt solar power in Singapore, the monthly payments on a solar loan will often be less than that of your electric bill before the solar panels were installed.
One of the biggest advantages of a solar loan is that it allows homeowners to get residential solar panels even if they’re unable to pay for its entirety up front, and once the loan has been fully paid off, homeowners will officially gain ownership of the solar panels on their roof. That being said, solar loans require you to have a good credit score, whilst bearing in mind that the loan works best if you’re planning to stick with those solar panels for the long haul; after all, they get progressively more beneficial over time.
Unlike a solar loan, solar lease doesn’t enable homeowners to actually own the residential solar panels that they’ve got installed. A solar lease works like a car lease, in that homeowners make a monthly lease payment to the solar panel provider.
In return, homeowners get to use the energy generated from the solar panels installed on their roof. Just like a solar loan, the monthly payments tend to be less than their monthly electricity bills. The leases usually range from 20 to 25 years and will often include a price escalator that outlines the increment of monthly payments each year. After the lease has expired, homeowners have the option to remove the solar panels, purchase them at a discounted price, or extend the lease.
Finance-wise, a solar loan seems to be the more viable option. For instance, a solar loan typically comes with a payment plan stretching from 5 to 15 years, and after that, you’ll be freed from your financial obligations. On the other hand, a solar lease locks you into a long-term contract and the money that goes towards the lease doesn’t actually contribute to you owning the residential solar panels; when you stop paying the lease, you’ll stop saving on electricity bills.
Additionally, solar loans have a fixed monthly payment, while the payments on solar leases increases each year. This means that if the cost of electricity doesn’t increase, you might end up paying more for solar panels in Singapore compared to your pre-solar electricity bill.
On the flip side, you’re responsible for maintaining your own solar panels in Singapore, so a solar lease doesn’t saddle you with that responsibility since you don’t actually own those panels.
Whichever financing option you choose, invest it in reliable and high-quality solar panels with Perry Management Clean Energy. For more information about our services, please visit our website.