Solar Financing in Arizona: Cash, Loan, Lease, PPA — and the Dealer Fee Trap

Arizona Solar Hub does not finance or sell solar. This page explains the four financing structures Arizona homeowners encounter, with dollar figures you can plug into your own spreadsheet.

The 4 ways to pay for solar in Arizona

• Cash. Pay the installer in full. You own the system outright from day one.
• Solar loan. A secured or unsecured installment loan from a solar-specific lender (Goodleap, Mosaic, Sunlight, Sungage, Dividend/Fifth Third) or a general-purpose HELOC. You own the system, you service the loan.
• Solar lease. A third party owns the system on your roof. You pay a flat monthly lease payment, typically for 20–25 years, with an escalator.
• Power purchase agreement (PPA). A third party owns the system on your roof. You pay per kWh the system produces, typically at a rate below your current utility retail rate, with an escalator.

All four are legal in Arizona. Only two let the homeowner capture the federal and state tax credits. That is the fork in the road.

Cash purchase: who it actually fits

Cash delivers the lowest lifetime cost because no interest accrues and no dealer fee is buried in the price. A homeowner paying cash for a $22,000 system in Arizona captures the full 30% federal Residential Clean Energy Credit under IRS §25D (worth ~$6,600) plus Arizona's $1,000 state Solar Energy Credit, netting the system to roughly $14,400.

Cash makes sense when all three are true: you plan to stay in the home at least five years, you have federal tax liability large enough to absorb the ITC, and the opportunity cost of the cash (what else could it earn) is below your solar-avoided electricity cost. If your emergency fund gets gutted to pay cash, finance instead.

Solar loan: the most common path in Arizona

Most Arizona solar purchases are financed. The lender universe breaks into two groups: solar-specific lenders who pay the installer a dealer fee, and general-purpose lenders (credit union HELOC, unsecured personal loans) who do not.

Lender	APR range (2026)	Term options	Dealer fee	Best for
Goodleap	6.99%–9.99%	10, 15, 20, 25 yr	17%–32%	Homeowners ITC-eligible who want low monthly
Mosaic	6.99%–10.49%	10, 15, 20, 25 yr	18%–30%	Mid-credit borrowers, larger systems
Sunlight Financial	7.49%–10.99%	10, 12, 15, 20, 25 yr	20%–34%	Installer-network convenience
Sungage	7.99%–11.49%	10, 15, 20, 25 yr	15%–28%	Strong credit (720+)
Dividend (Fifth Third)	7.49%–10.49%	10, 15, 20, 25 yr	17%–30%	Bundled with MPU/roof financing
Local credit union HELOC	7.50%–9.25% (variable)	10, 15, 20 yr draw + repay	0%	Homeowners with equity + 700+ credit

APR ranges reflect published disclosures and EnergySage Arizona marketplace data current as of Q1 2026; confirm the rate on your signed Truth-in-Lending disclosure. NREL's Solar Industry Update documents that solar-specific lender dealer fees averaged 28–33% of system cost in recent quarters — effectively a hidden finance charge rolled into loan principal.

Solar lease vs PPA

Both leases and PPAs keep the system on a third party's balance sheet. The homeowner rents access.

• Lease: flat monthly payment (e.g., $115/month), with a 1.9%–2.9% annual escalator baked into the 20–25 year contract.
• PPA: payment per kWh produced (e.g., $0.11/kWh), with a similar escalator. Bill scales with production, so low-production months cost less.

The Arizona-specific gotcha: with a lease or PPA, the third-party owner captures the 30% federal ITC and the $1,000 AZ Solar Energy Credit. The homeowner does not. Per IRS §25D, the Residential Clean Energy Credit requires the taxpayer to own the qualifying property. Leases and PPAs fail that test. This single point flips the economics against leases and PPAs for most ITC-eligible Arizona homeowners.

For full incentive detail, see Arizona solar incentives.

Dealer fees explained with a real Arizona example

Consider a $25,000 all-in cash quote for a 7.5 kW system. Two paths:

Path A — HELOC at 7.99% fixed, 15-year term. Principal: $25,000. Monthly payment: ~$239. Total paid over 15 years: ~$43,000. Apply $6,500 federal ITC + $1,000 AZ credit after year 1 ($7,500 bill credit) and the net cost is ~$35,500.

Path B — Solar loan with 25% dealer fee at 6.99% "teaser" APR, 20-year term. The installer is only willing to honor the $25,000 price if you finance with their lender, because the lender remits 25% of the loan principal to the installer as a dealer fee. To net $25,000 to the installer, the loan principal is grossed up to $33,333 ($25,000 / (1 - 0.25)). Monthly payment: ~$258. Total paid over 20 years: ~$61,900. Even after the same $7,500 credit, net cost is ~$54,400.

Same system. Same installer. Path B costs $18,900 more — roughly 53% over Path A — because the dealer fee plus longer term compounds the hidden finance charge. The 6.99% "teaser" APR is not the real cost of capital; the true effective APR once the dealer fee is unwound lands closer to 14–16%.

This is the single biggest trap in Arizona residential solar financing. Always request a cash price and a HELOC quote in writing before accepting solar-specific lender terms.

Best-fit decision framework

1. Do you have federal tax liability of at least $6,000 in the year of installation? If no → lease/PPA or a multi-year ITC carryforward strategy. If yes → continue.
2. Do you plan to stay in the home at least 7 years? If no → reconsider ownership entirely; the transfer mechanics on financed systems at sale are real friction. If yes → continue.
3. Do you have home equity and a credit score above 700? If yes → HELOC almost always wins on total cost. If no → continue.
4. Are you willing to demand a cash price and compare it to the financed price? If yes → solar loan may still pencil; negotiate the dealer fee out or down. If no → you will overpay.

For utility-specific payback math feeding into this decision, see APS solar, SRP solar, and Arizona solar cost.