Solar panel finance: what the monthly figure hides

Financed solar is sold on a monthly figure compared against your current electricity bill. That comparison is designed to reassure and it answers the wrong question.

The question is whether the total repayable, set against the cash price, leaves enough of the saving for you rather than the lender, and it can be answered with three multiplications before anyone visits your house.

The framing to reject

“Your monthly payment is less than your current bill” tells you almost nothing. It compares a fixed repayment against a variable cost, over a term you have not been told, without mentioning that the bill does not disappear.

You still import electricity. Solar reduces the bill; it does not remove it. So the honest comparison is:

Monthly repayment against the reduction in your bill, not against the bill itself.

If the repayment exceeds the saving, you are worse off in cash terms every month until the agreement ends, in exchange for owning the system afterwards. That may still be a reasonable trade. It is a different trade from the one being described.

The two numbers that matter, with the arithmetic

Total repayable. Monthly payment multiplied by the number of payments, plus any fees and any deposit. This is what the system costs you.

The cash price. What the same installation costs paid outright, which for a median 4kW system is around £7,100 on the government’s 2025/26 installation cost data, zero-rated for VAT through March 2027.

The difference between them is the cost of the finance. Worked through at an illustrative 10% APR over ten years: £7,100 borrowed repays close to £94 a month, roughly £11,260 in total. The finance costs £4,160, which is 59% of the cash price. Express your own quote’s gap the same way and you have a figure you can judge against any other loan you have ever taken.

Ask for both numbers. An installer offering finance can produce the cash price. One who resists is telling you something.

Where the return goes

Work it through in the right order:

1. Estimate the annual saving: generation, self-consumption share, import and export rates treated separately. Call it £650 for the median system, per the worked payback example.
2. Work out the annual finance cost: total repayable minus cash price, divided by the term in years. In the illustration: £416.
3. Subtract two from one: £234 a year to you, £416 to the lender, during the term.

If the result is close to zero, the installation may be perfectly sound while the deal returns you almost nothing during the agreement, the fifth of the five honest cases where solar fails. The value arrives afterwards, when payments stop and the saving continues.

That is the real shape of financed solar: a thin slice for the term, then the full saving. Whether that suits you depends on how long you intend to stay, and a move inside the term converts the trade into a plain loss.

Zero per cent, and what it usually means

Interest-free offers are common and worth examining rather than dismissing.

Sometimes they are genuine, funded by the installer as a sales cost. Sometimes the finance cost has been added to the headline price, so you pay it anyway without seeing it.

The test: get a cash price from the same installer and compare it against the total repayable on the interest-free deal. If they match, the offer is real. If the cash price is lower, the interest is in the price.

Also get cash prices from two other installers and hold all three against the published medians above. A financed price that sits well above the market is where the cost has gone, and cost per kilowatt peak exposes it in one division.

Secured or unsecured

Ask directly whether the agreement is secured against your property.

Secured lending affects what happens if you sell and can complicate a buyer’s mortgage. Unsecured is a straightforward consumer credit agreement, and paying even part of the price on a credit agreement brings the credit provider into responsibility for the purchase under consumer credit law, which has practical value if the installer later fails.

This is not an argument against secured finance, which often carries a lower rate. It is an argument for knowing which one you are signing.

Alternatives worth pricing

Your own savings, if the return on the solar exceeds what the money is currently earning. Compare honestly, in today’s money, which is the comparison our whole methodology exists to keep clean.

A general-purpose loan from a bank, which may be cheaper than the installer’s arrangement and is not tied to the supplier.

Public interest-free lending, where it still exists. Check before you count on it: Scotland’s well-known solar loan has closed, Home Energy Scotland’s current funding covers heating and insulation but not standard solar PV, and older articles still advertising it are out of date. Where a genuine 0% scheme does apply to you, it is worth roughly the whole finance-cost line in the arithmetic above, which is why it always beat small grants.

Waiting and paying cash, which costs you the generation in the meantime. That cost is real, a year’s delay on the median system is roughly £650 of forgone saving, and should be counted rather than assumed to be zero.

The one question

“What is the cash price, and what is the total repayable?”

Two numbers. Everything else follows from the gap between them, and the calculator will run the financed and outright versions side by side, with a deposit and term as inputs, so the trade is visible as two curves rather than a monthly figure and a feeling.