Equipment Changed After Loan Option Was Quoted

[affiliatenow]

To start, I am not a fan of the 2.9% escalator built into the leases here in Arizona... but I know they are the nature of the beast and pretty standard. I had a Sun Edison Dealer come in and quote a 20 yr. lease, and they came up with the following:


Shading: 100%
Orientation / Slope: 207 / 22
System Size (DC): 9.45kW
Panels x Watts: 35 x 270 SunEdison panels
Inverter Type: String
Derate Factor: 0.84
Annual Degradation: 0.7%
Est. Annual Production: 17, 482 kWh

So on the 20 year lease, I was starting at $147/mo (plus $23/mo. est. grid utility) and after the escalator kicks in full my bill will go to $252.52/mo. (plus $43.92/mo. est. grid utility) for year #20.

With my current electric bills ranging from $120-$360 per month (average is $199/mo.) I did not feel that paying $300/mo. for my cheapest electric bill ever (even in 20 years) is something that was good.

So I asked for them to provide me with the numbers on a loan option, and they switched the equipment on me explaining the SunEdison panels are heavily subsidized into the leases.

So the loan option was as follows:

Total Loan Amount: $36,985
Federal Est. Credit (paid to dealer): -$11,095.50
AZ State Est. Credit (to Dealer): -$ 1,000
Net Loan Amount: $24,889.50
Rate: 3.99%
Term: 20 years

Monthly Payment: $161.63
Est. Utility Grid: $ 23

Total Est. Monthly: $184.63

That Total Est. Monthly of $184.63 will be surpassed in year #4 of the lease...

This "Loan" system though changes to the following equipment:

Shading: 100%
Orientation / Slope: 208 / 22
System Size (DC): 9.45kW
Panels x Watts: 31 x 305 LG panels
Inverter Type: String (SMA Sunny Boy 7700TL)
Annual Degradation: 0.7%
Est. Annual Production: 17, 481 kWh

So I am leaning to the Loan Option as that cost is locked in for 20 years and is met in year #4 of the lease... but they switched me to the LG panels and that Sunny Boy Inverter.

Am I "cheaping" out on the equipment to get an overall lower cost by choosing the LG & Sunny Boy (Loan) over the SunEdison (lease)?

[Naptown]

Short answer no
This is all good equipment

[solar pete]

To start, I am not a fan of the 2.9% escalator built into the leases here in Arizona... but I know they are the nature of the beast and pretty standard. I had a Sun Edison Dealer come in and quote a 20 yr. lease, and they came up with the following:


Shading: 100%
Orientation / Slope: 207 / 22
System Size (DC): 9.45kW
Panels x Watts: 35 x 270 SunEdison panels
Inverter Type: String
Derate Factor: 0.84
Annual Degradation: 0.7%
Est. Annual Production: 17, 482 kWh

So on the 20 year lease, I was starting at $147/mo (plus $23/mo. est. grid utility) and after the escalator kicks in full my bill will go to $252.52/mo. (plus $43.92/mo. est. grid utility) for year #20.

With my current electric bills ranging from $120-$360 per month (average is $199/mo.) I did not feel that paying $300/mo. for my cheapest electric bill ever (even in 20 years) is something that was good.

So I asked for them to provide me with the numbers on a loan option, and they switched the equipment on me explaining the SunEdison panels are heavily subsidized into the leases.

So the loan option was as follows:

Total Loan Amount: $36,985
Federal Est. Credit (paid to dealer): -$11,095.50
AZ State Est. Credit (to Dealer): -$ 1,000
Net Loan Amount: $24,889.50
Rate: 3.99%
Term: 20 years

Monthly Payment: $161.63
Est. Utility Grid: $ 23

Total Est. Monthly: $184.63

That Total Est. Monthly of $184.63 will be surpassed in year #4 of the lease...

This "Loan" system though changes to the following equipment:

Shading: 100%
Orientation / Slope: 208 / 22
System Size (DC): 9.45kW
Panels x Watts: 31 x 305 LG panels
Inverter Type: String (SMA Sunny Boy 7700TL)
Annual Degradation: 0.7%
Est. Annual Production: 17, 481 kWh

So I am leaning to the Loan Option as that cost is locked in for 20 years and is met in year #4 of the lease... but they switched me to the LG panels and that Sunny Boy Inverter.

Am I "cheaping" out on the equipment to get an overall lower cost by choosing the LG & Sunny Boy (Loan) over the SunEdison (lease)?

Hello affiliatenow and welcome to solar panel talk.

Short answer is no, panels are panels and SMA inverters are very good, cheers. Leasing is not that popular around these parts most seem to prefer a purchase over lease or PPA. Cheers

[affiliatenow]

Thanks for the quick responses! That makes me feel better that I am not the only one thinking that signing a 20 year lease with a 2.9% escalator is not as good as locking in a 3.99% 20 year loan.

I understand the appeal of the Lease when they first came out... but with Loans being so low right now, they seem like the no brainer.

3.99% vs 58% (2.9% x 20) increase over 20 years... plus the added bonus of increased home value with the loan!

[Naptown]

Here in Maryland I have compared leases with a purchase using a 2.99% interest rate over a 12 yeat term and it works out to be a much better deal than any lease currently available
Cash posititive in the first year and every year and no hassle selling your home.

[Ian S]

For Arizona, that purchase price seems high. You need to get more quotes. Sounds like you're with APS. Be aware that the base rate is almost sure to go up within a year or two.

[SanDiego_installer]

That is $3.91/Watt.....too high. Agree with Ian S, get more bids.

LG panels and SMA inverter are top of the line, good luck.

[Yaryman]

Just a couple thoughts on the numbers you presented.

$24,889.50 20 year loan at 3.99% yields at loan payment of $150.83 instead of $161.63 as you mentioned.
Also that loan would have you paying $11,308 in interest over the course of the loan.

I used Yahoo's mortgage loan calculator to figure out the payments.

http://www.bankrate.com/yclc/calc/mortgage-calculator/mortgage-calculator.asp?prod_number=28338423&header_name=Mortgage&product_name=Mortgage

[Carl_NH]

If you are going to get a loan, then shop for a system from 3-4 different vendors then get the financing arranged. You should get the federal tax and state tax credits - not the dealer.

I would look at a home equity line for this and also if you can put 30% down you will get that back as a tax rebate next year.

You are getting good gear as others have stated, but for 9.45KW system should be $32-33K range, and if you put $9K down and finance $23K for 10 years @ 3.5% is $225 a month ($27K total) and you will get your $9K back in 2015 with the tax credit. Using a home equity loan you will be able to write off the interest.

So there are much better deals out there for systems and financing that you should investigate!

Good Luck,