How HVAC Payment Plans Work

Whether you have the money to pay for your HVAC system project upfront or not, you know air conditioning repair or replacement is a major purchase. HVAC systems can be quite expensive, especially if you prefer a high-efficiency HVAC system.

Even if you don’t need to fully replace your HVAC system, you may want to weigh your options to save you the most money. Just because you have all the money you need to repair or replace your HVAC system in hand doesn’t mean you want to spend it all at once.

That’s why many air conditioning companies offer HVAC financing options for their customers. The number one benefit of a financing plan for your new heating and cooling system is that you won’t have to wait to replace it. The last thing you want if your HVAC system struggles during the most extreme temperatures of the year is to have to wait several months to replace it.

However, HVAC company financing is but one of many alternatives.

There are plenty of online lenders, installment loan providers, banks, credit unions, and personal loan companies that claim to offer competitive rates on HVAC unit costs. You can also choose to pay with cash or with a new or existing credit card to pay the bill.

To help you make the best possible decision for your situation and budget, we’ve created this guide to examine the many options homeowners have for financing their next HVAC project.

Getting the Best Value for Your HVAC Financing

If you want to secure the lowest possible price for your cooling system project, you should first compare multiple quotes from HVAC contractors in your area.

Each of these HVAC contractors likely has their preferred manufacturers they work with, and each of those manufacturers likely offer their specific payment plan. In some cases, contractors will offer their HVAC payment plan so you won’t have to go through a bank.

Do your research on the HVAC equipment manufacturers they partner with and be sure you’re getting a quality product. You want to know for certain that your home gets the best possible heating and cooling for your money.

After looking at multiple estimates and weighing the expertise and reputation of each company, you can come to a final decision about your HVAC financing.

Direct Financing Benefits

HVAC companies that offer financing can be far more beneficial for homeowners because it’s far more direct. This is because you have a single point of contact for every aspect of your HVAC service. You purchase your unit from them, take out a loan with them, and make monthly payments to them. It’s far simpler and can be more cost-effective for you.

Most HVAC companies sweeten the deal by offering zero to minimal upfront costs on heating and cooling services. You won’t have to immediately shell out a huge amount of money. They also offer easy application and quick credit approval followed by a low monthly payment.

Low Monthly Payments for HVAC Maintenance

Many homeowners in Knoxville, TN choose to ignore the pressing need to repair or replace their AC systems because they fear the high costs of HVAC services. They worry they don’t have the right credit score and will never get the approved credit they need to get an affordable rate.

Unfortunately, this often leads to bigger problems down the road. If you wait too long to repair or replace your AC system, you could end up with a much larger replacement cost – or even medical bills from suffering a heat stroke in your own home!

Fortunately, it’s possible to stagger out the payments in such a way that you save a tremendous amount of money and never feel like you’re struggling to afford them.

If you’re a borrower with approved credit, your monthly payments on your new HVAC system can be extremely affordable. The credit approval process is often very quick, allowing you to secure your HVAC financing in a matter of hours.

Still, you want to be sure your monthly payment is affordable. You don’t want to add the equivalent of a second car payment to your monthly bills.

Energy Efficiency Incentives

Remember – the more energy-efficient your cooling system is, the easier it will be to handle your HVAC financing. This is because your energy bills each month will be lower, freeing up more money to pay your other bills.

Also, local governments and the federal government may offer tax incentives if you get a more efficient system for your home.

This means your tax burden will be smaller because you’re helping the environment, reducing your carbon footprint, and putting less stress on your local power grid. Make sure to speak with your HVAC contractor to find out about your options when it comes to a more efficient HVAC unit.

Bank & Credit Union Financing

Many homeowners opt to go to their local bank or credit union to finance a new HVAC system. Lenders like Wells Fargo Bank and others provide some great incentives to borrowers looking to upgrade to a new system that is more energy-efficient than their existing systems.

Sometimes this works well, but often homeowners find they won’t get the best interest rates or will be tied to higher minimum monthly payments – especially if they have an existing loan with the lender.

Additionally, banks and credit unions have much stricter credit approval processes and require a higher minimum credit score. The minimum monthly payments required by such an equal housing lender may be outside of your budget, especially if you’ve chosen a high-efficiency HVAC system. For more affordable payment options, many homeowners choose to look elsewhere.

Credit Union Benefits

Compared to banks, credit unions offer borrowers with approved credit much lower interest rates. This is because credit unions are not a for-profit business model. With approved credit, you could find they offer the best possible rate on your new air conditioner purchase.

Long Wait Times

Unfortunately, credit unions and banks alike are some of the slowest financing options out there when it comes to getting a new HVAC unit. In some cases, you may have to wait weeks to get your money.

If your existing HVAC unit is on the fritz or already out of commission, you don’t want to wait that long for your air conditioning to work properly.

Alternative Payment Methods

As you can see, loan funding for a new air conditioner can be a headache if you prefer going through a bank or lender – even if you have approved credit. If you’d like to avoid the HVAC financing route altogether and can afford the upfront costs for a new HVAC unit, paying with cash or a card can be to your advantage.

Paying with Cash

Paying for a new HVAC unit with cash helps you avoid loan terms, online lenders, a soft credit check, and other steps of the process. Even if you have excellent credit, being able to pay off the new system in full means you won’t be subject to credit approval.

You’ll also never have to worry about an interest rate or late payment fee if you pay with cash. Still, this is by far the most expensive strategy for upfront costs since you’ll be down as much as several thousand dollars immediately.

Paying with Card

Depending on your specific credit card agreement and your minimum interest charge, you could save a decent amount of money in the long run by using a credit card. Rather than being subject to credit approval on your new system purchase, you can use your existing card to make the purchase.

Still, homeowners should check the competitive interest rates offered by their HVAC solution providers. Getting a new HVAC system designed with energy efficiency in mind and paying low monthly payments to your installer could help you save money and have a lower interest rate than what you’d pay with your credit card.

Should You Try Personal Loans for HVAC Services?

Some homeowners attempt to go around conventional lenders and direct financing by taking out a personal loan. Personal loan providers vary wildly in reputation and quality of service, but they do provide a host of options that may be attractive.

A personal loan for an HVAC system is an unsecured loan given in a lump sum upon credit approval. These loan proceeds are then used immediately to pay for the costs of HVAC services like repair or system replacement.

Personal loan providers like Wells Fargo Bank offer financing solutions like personal loans for a wide range of home improvements depending on your loan purpose. However, there are countless other personal loan providers, each offering different interest rates and applicable terms.

Pros of Personal Loans

Even if you have a terrible credit score, you can get approved credit through many personal loan companies. These groups are more flexible and forgiving and can provide a loan offer that works for your immediate needs, even if they’re subject to credit approval.

A major benefit of taking advantage of these lenders for your HVAC financing is that it can help you build your credit score. When you repay personal loans over time, your credit score increases, showing future lenders that you are responsible.

This means you’re a less risky investment for them, so they’ll be far more likely to offer you better loans at lower minimum monthly payments after looking at your credit history.

Personal loans are also very easy to apply for. Applying through an online lender and using their online application form can take only a few minutes, making them one of the simplest financing options. If you need an HVAC solution ASAP and can afford the higher interest rates, they can be a solid option.

Cons of Personal Loans

First and foremost, personal loans often have much higher interest rates than other options. This is especially true if you have poor credit.

Personal loans may also have prepayment penalties, ensuring you only pay the minimum amount of equal payments each month. It’s important to look closely at advertised rates and see if your loan provider offers an autopay discount.

As financial decisions go, choosing whether or not to work with one of these lenders is entirely based on your financial situation.

You might be better off using a credit card rather than getting a loan if you have bad credit. Existing cardholders may pay less over time. That way, you can at least rest assured you won’t be hit hard every billing cycle.

When you need energy efficiency in your air conditioning system, personal loans are practically guaranteed to get you the equipment you need but could hit your wallet harder in the long run. And if you avoid paying your loan off, you could ruin your credit score.

Conclusion

In conclusion, navigating the myriad of financing options for HVAC systems can be complex but is crucial for making a financially sound decision. Homeowners should carefully consider their budget, credit score, and urgency of installation when choosing between direct financing through HVAC companies, loans from banks or credit unions, personal loans, or paying outright with cash or credit cards. While direct financing offers simplicity and often low upfront costs, banks, and credit unions may provide more competitive rates for those with good credit. Personal loans can be an alternative for those with less-than-perfect credit, though they often come with higher interest rates. Paying with cash or credit cards can eliminate the need for credit approval but requires immediate financial outlay. Ultimately, the best choice varies depending on individual circumstances and requires balancing upfront costs, monthly payments, interest rates, and the potential benefits of energy-efficient systems. By comparing quotes, understanding the terms of each financing option, and considering energy efficiency incentives, homeowners can make an informed decision that ensures their home is comfortably and affordably heated and cooled.