Is HVAC System Financing a Good Idea?

Whether you’re interested in upgrading to a more energy-efficient HVAC system or you need to replace a system that is too far gone to repair, you should always consider it an investment. When it comes to purchasing a new unit, many of the local companies offer on-site financing through one or more lenders. Here, you’ll learn more about HVAC system financing and whether it’s right for you.

Financing vs. Paying in Full

If you can afford to pay for your new HVAC unit in full, you should do so. This will help you avoid spending extra money on things like interest and financing fees, and there will be no need for credit checks. What’s more, there’s no risk involved since you own the unit outright and cannot fall behind on payments. Financing is a fantastic option for homeowners who want to upgrade to a new model energy-efficient system that may otherwise be outside their budgets, however.

Requirements for HVAC System Financing

Different HVAC companies work with different lenders, so this is an important consideration when it comes to companies that offer on-site financing. Even so, you can always seek your own lender to cover the costs of your new system, and this is beneficial if you have a good relationship with a specific lender. If you’ll apply for credit through the company, you’ll likely need a good credit score, several open credit accounts, and no derogatory accounts on your credit report. You’ll also need proof of income and home ownership to help mitigate any risks assumed by the lender.

Financing for Less-than-Perfect Credit

Not everyone has perfect credit, so if yours is a bit lower than you’d like, you might think you won’t qualify for financing. Fortunately, this isn’t the case. Many lenders are willing to work with people who have fair credit, and some will even work with you if you have filed bankruptcy or you’re otherwise rebuilding your credit. Keep in mind that your interest rates and payments will likely be higher; again, lenders do this to help mitigate any risks they assume when they lend to those who have challenged credit.

Financing the Installation and Labor Costs

If you obtain your financing directly through the HVAC company, you may have the option to also finance any labor and installation costs involved. However, if you choose to find your own lender, you may not have this option. Be sure you talk to the HVAC company about your personal needs, and ask whether the HVAC system financing covers the installation as well.

Don’t Buy More than You Can Afford

Finally, when it comes to HVAC system financing, you may feel tempted to go with the absolute best and newest model you can find. Because you aren’t paying cash up front, it may seem as if you can get away with spending more than you would otherwise. As the retail price of the unit climbs, so will your monthly payments. Be sure you take the time to calculate your monthly payments – including interest – based on the total amount you’ll spend.

HVAC system financing is a great alternative for homeowners who need to upgrade their systems, but who do not have the cash on hand to pay for it outright. There are several lending options available, so be sure to consider this carefully before you sign any contracts.

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