A Guide to HVAC Financing

Replacing a heating and cooling system generally costs more than repairing it. Whether you’re planning an air conditioning upgrade or ordering a furnace replacement after a system failure, the cost can feel overwhelming. Fortunately, many companies offer financing options to make new equipment more affordable. Here’s how HVAC financing works.

Can You Finance a New HVAC System?

Yes, many contractors allow you to finance a new HVAC system. Financing is a lifesaver if you don’t have the funds to pay in full. With HVAC financing options, it’s possible to pay for your new system over time instead of all at once.

Financing new HVAC equipment offers these benefits:

You can replace a failing system immediately instead of sweating through the summer or shivering through the winter.
It allows you to spread your payments over several years.
You can make monthly payments instead of draining your savings account.
It allows you to take advantage of limited-time tax credits and other incentives for installing HVAC equipment that can help you save energy.

Understanding HVAC Financing

HVAC financing is similar to other types of financing, such as auto loans or mortgages. Instead of paying the full cost up front, you borrow money and pay it back over time. Some HVAC contractors offer their own financing plans, while others partner with third-party lenders. Either way, you make monthly payments until you’ve repaid the total cost of your HVAC installation.

You may even qualify for one of these promotional terms:

Low or no interest for up to 18 months
Flexible qualification requirements
Long repayment terms to keep monthly costs low
Fixed monthly payments

When choosing a finance plan, compare loan terms, interest rates and the total cost of borrowing.

Common HVAC Financing Options

The availability of financing depends on your repayment history, income level and financial goals. You also need to think about your installation timeline. If you need a new HVAC system immediately, you may not have as many options as someone who’s planning to upgrade within 3 to 6 months.

Personal Loans

Banks, credit unions and other lenders offer personal loans that can be used for almost any purpose, such as installing a new HVAC system. These loans come with fixed interest rates and predictable monthly payments, making them easy to manage. Another benefit of personal loans is that they’re extremely flexible. If your HVAC system costs less than expected, you can use the remaining funds to pay down credit cards, replace a broken appliance or take a weekend trip.

Credit Cards

Some people use credit cards to finance their HVAC systems. This makes sense if you can qualify for a card with 0% financing for 6, 12 or 18 months. Otherwise, you may want to consider other financing options, as high interest rates can significantly increase the amount owed once the promotional interest period ends.

Like personal loans, credit cards are extremely flexible. However, credit limits vary based on your income, credit score and other factors. If you aren’t approved for a limit high enough to cover your HVAC installation, you may have to pay the balance in cash.

Contractor Financing

Some contractors partner with financing companies to make payment plans available to their customers. One of the major advantages of contractor financing is that you can apply and get approved right after you get an HVAC estimate. You’ll know exactly how much you can afford to spend, making it easier to choose a new system and accessories. Contractor financing may also come with promotional interest rates or flexible payment terms.

Home Equity Loans or Lines of Credit

Home equity loans and home equity lines of credit (HELOCs) allow you to use some of the equity in your home to buy a new HVAC system. Equity is the difference between how much your home is worth and how much you owe on the mortgage. For example, someone with a home value of $300,000 and a mortgage balance of $200,000 has $100,000 in equity.

These financing options often have low interest rates and longer repayment terms. However, the application process takes longer, so you may want to explore other forms of financing if you need new HVAC equipment right away.

What Is the Best Way to Finance New HVAC Equipment?

No single financing option is right for every homeowner. You need to consider your budget, desired repayment terms and installation timeline when choosing a payment plan. Some people prefer the flexibility of personal loans and credit cards, while others appreciate the ease of applying for contractor financing.

It’s also important to get an installation estimate before you apply for financing. When you get a quote from a professional, it’s easier to determine how much money you should borrow.

Meet the Author

Tara Plogsted