Installing a new HVAC system is a major home improvement project that can cost thousands of dollars. For many homeowners, paying the full cost upfront simply isn't feasible. Thankfully, there are several HVAC financing options available that can make upgrading your heating and cooling system more affordable. This guide will explore everything you need to know about HVAC financing, including the different types of financing available, how to qualify, and tips for getting the best deal.
There are several reasons why financing your new HVAC system may make sense:
While paying cash is ideal if you can afford it, HVAC financing allows you to get the system you need now without draining your savings. As long as you can comfortably afford the monthly payments, financing can be a smart way to invest in your home's comfort and efficiency.
There are several common financing options to consider for your HVAC installation:
Many HVAC contractors offer their own financing programs, often through partnerships with lenders. This allows you to finance your purchase directly through the company installing your system. Benefits may include:
The downside is that interest rates may be higher than other options if you don't qualify for promotional rates. Be sure to compare the terms to other financing methods.
Taking out a personal loan from a bank, credit union, or online lender is another popular option for HVAC financing. Benefits of personal loans include:
The interest rate you qualify for will depend on your credit score and financial profile. Those with excellent credit can often get rates as low as 6-8%, while average credit may mean rates of 10-20% or higher.
If you have equity built up in your home, tapping into it can be an affordable way to finance HVAC installation. Options include:
Home equity financing typically offers lower interest rates than personal loans or credit cards. The downside is that your home serves as collateral, putting it at risk if you default on payments.
Charging your HVAC purchase to a credit card is an option, especially if you can take advantage of a 0% intro APR offer. Benefits may include:
The major downside is that credit card interest rates are typically much higher than other financing options once any 0% promo period ends. Only use a credit card if you can pay off the balance before high interest kicks in.
The qualifications for HVAC financing will vary depending on the type of financing and lender. In general, you'll have the best chance of approval and lowest rates if you have:
Even if your credit isn't perfect, many HVAC companies offer financing options for a range of credit profiles. Shopping around and comparing offers from multiple lenders is the best way to find financing you can qualify for.
Follow these tips to make sure you get the most affordable HVAC financing possible:
Review your credit reports from all three bureaus for free at AnnualCreditReport.com. Dispute any errors that could be dragging down your score before applying for financing.
Don't just go with the first offer you receive. Get quotes from at least 3-5 different lenders or financing sources to find the best rates and terms.
Many HVAC companies run seasonal promotions with 0% interest financing or other perks. Timing your purchase to take advantage of these offers can lead to big savings.
While a shorter loan term means paying less in interest overall, stretching out payments over a longer term can make monthly payments more affordable. Just be careful not to extend the term so long that you're still paying off the system after its useful life.
Putting money down reduces the amount you need to finance, potentially qualifying you for better rates. Even a small down payment of 10-20% can make a difference.
Don't be afraid to negotiate on the price of the HVAC system itself. Getting a better deal on the equipment and installation means you'll need to finance less.
To give you an idea of what to expect, here are some typical rates and terms for different HVAC financing options:
| Financing Type | Typical Interest Rates | Typical Loan Terms |
|---|---|---|
| HVAC Company Financing | 0-26.99% | 6-120 months |
| Personal Loans | 6-36% | 12-84 months |
| Home Equity Loan | 3-12% | 5-30 years |
| HELOC | 4-21% | 5-30 years |
| Credit Cards | 13-25% (after promo) | Revolving |
Keep in mind these are just general ranges. The specific rates and terms you qualify for will depend on your credit profile, loan amount, and other factors.
Each financing option has its pros and cons to consider:
Consider what's most important to you - convenience, low rate, flexibility, etc. - when deciding which HVAC financing option is right for your situation.
The process of getting HVAC financing typically works like this:
The entire process from application to install can take anywhere from a few days up to several weeks depending on how quickly you move and lender approval times.
Deciding whether to finance or pay cash for your HVAC system really comes down to what's best for your financial situation:
For those who can afford it, paying cash is generally preferable as you save on interest. But if that's not an option, financing provides a way to get needed upgrades without major upfront expense.
To avoid problems with your HVAC financing:
Avoiding these common pitfalls can help you secure affordable financing and avoid financial stress down the road.