Do HVAC Companies Offer Financing?
When your heating or air conditioning goes out, your home can quickly turn into a hostile climate.
A new HVAC system isn’t cheap. If you’re wondering whether HVAC companies offer loans or payment plans, here’s some good news:
Yes, most HVAC companies offer some sort of financing to make this pricey purchase less daunting.
“Everybody in home improvement should offer financing,” says Rick Wilson, Director of Contractor Success at Acorn Finance. His advice to contractors: “If you offer competitive financing, you’re making home improvement more affordable for the people who need it.”
By some accounts, installing a new system costs $10,000 on average, and up to $15,000 for a high-end model. Wilson says that sounds a little low. He thinks a $15,000 average is more realistic.
“My sister lives in Atlanta, and she called me when she bought her last system. I think she got it for $12,000,” he tells us. “And she’s like, ‘Is that a good deal?’”
Wilson’s answer: Yes, that’s a good deal. “I’ll take two all day long,” he says.
Costs vary widely around the country. In California, where Wilson lives, he thinks you can expect to pay around $18,000.
Let’s explore how to finance this expense.
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$1,000-50,000
Loan Amount
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8.49-35.99%
APR
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3–7 years
Terms
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560
Minimum Credit Score
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Disclaimer
Personal loans made through Upgrade feature Annual Percentage Rates (APRs) of 8.49%-35.99%. All personal loans have a 1.85% to 9.99% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. Loans feature repayment terms of 24 to 84 months. For example, if you receive a $10,000 loan with a 36-month term and a 17.59% APR (which includes a 13.94% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $341.48. Over the life of the loan, your payments would total $12,293.46. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by Upgrade's bank partners. Information on Upgrade's bank partners can be found at https://www.upgrade.com/bank-partners/.
Two types of financing
We spoke to Thomas Taylor, Sales Administrator at Clarke & Rush, a heating and cooling contractor in Sacramento, CA. He agrees that $10,000-$15,000 sounds about right for a new HVAC.
“There’s a lot of change in our industry, especially with refrigerants and technology,” he tells us. There’s a move to get hybrid gas/electric equipment converted to all electric, which is more environmentally friendly. “But it’s very expensive. So that’s where financing steps in.”
HVAC financing offers generally fall into two categories.
Important
0% interest, same-as-cash
This is a shorter-term loan (you often see 6-month, 12-month, or 18-month repayment periods) touting 0% interest. This is a good option if you’re certain you can pay off the HVAC loan in the scheduled period.
If not, you’ll be subject to “deferred interest.” That means if you haven’t paid the debt in full by the end of the term, you will owe interest, not just on your remaining balance, but on the entire cost of the purchase. Even more daunting is the fact that the deferred interest is usually in the neighborhood of 28-30%. The interest then keeps accruing until you’ve paid off the loan. It can get pricey, fast.
Long-term, fixed-rate
A typical example of this type of financing is 120 months at 9.99% interest. The downside is that, with interest, you’ll spend a lot more than the listed price of the HVAC by the time you’re done paying it off. The benefit is that the loan is sliced into much smaller monthly payments.
Let’s consider Wilson’s sister’s $12,000 HVAC. Enter a $12,000 price, 9.99% interest rate, and ten-year (120-month) repayment period into a handy fixed-rate loan calculator, and you’ll see a monthly payment of $158.51 for ten years. So a 158.51 monthly payment x 120 months = $19,021.20 total.
That’s over $7,000 more than the price of the HVAC. But the monthly payment is nice and low, which is more appealing to most people.
As Wilson puts it, “The price doesn’t matter. It’s the convenience that the contractor is offering their customer.”
Taylor agrees: The most popular loans for his customers involve “paying some sort of interest over an extended period.” He points out that many of these loans have no penalty for prepayment. “Let’s say you had a good month, and you got a thousand extra dollars. Some of these loans will allow you to take that thousand dollars and pay down the premium as well.”
“You do have to read the fine print,” he cautions, to confirm your pre-payment terms.
Credit score qualifications
At Clarke & Rush, most of their financing offers are available for applicants with a credit score of 600 to 800+, which FICO considers “fair” to “exceptional.”
Clarke & Rush can also offer additional financing options from the National Energy Improvement Fund. NEIF is an organization with a mission to “provide trusted financing for upgrades that make homes and buildings efficient, safe, healthy, and comfortable.” Taylor mentions that “NEIF offers some interesting rates, and they’ll accept a much lower credit score.”
Save more with rebates
Tip
A fascinating thing about the HVAC industry is that it’s awash in rebates. “I think the reason why there’s so many rebates is it’s the thing in your house that uses the most energy,” Wilson says. In fact, more than half of the energy a home uses is for heating and air conditioning.
The Inflation Reduction Act of 2022 unleashed billions of dollars for Home Energy Rebates for deep discounts on appliances that can lower utility bills.
You can find which rebates are available in your state.
Rebates can come from more local sources, too. Taylor mentions SMUD, the Sacramento Municipal Utility District, which offers rebates for customers who purchase qualifying energy-efficient appliances.
Research the utility companies in your area to seek local rebates.
“If you play your cards right,” Taylor says, “you could wind up with a $14,000 HVAC, and rebates cover $4,000 worth of that. Most of our customers end up at $10,000 [cost].”
He says this knowledge of the local rebate landscape is an advantage of a smaller, local HVAC business like Clarke & Rush, where the employees are intimately embedded in the community.
“Knowing the SMUD people. Going out to dinner with the SMUD people. They’re our neighbors,” Taylor says. “Not that the big guys aren’t here, or that their employees don’t live here. But it’s just a little different, because we have three locations throughout the Sacramento area, and this is all we do.”
Speaking of the big guys…
Financing through the four biggest HVAC companies
Here’s what you can find, as of September 2024, from the national HVAC manufacturers:
- Trane lists a 60-month, 0% interest offer through Wells Fargo.
- Lennox features a search function for select local contractors to see what financing they offer.
- Carrier offers a range of financing through Wells Fargo plus a range of lease-to-own options.
- Rheem offers financing through its KwikComfort credit card, including an 18-month/0% offer with deferred interest.
Financing through big box stores
As of September 2024, this is what you can find at home improvement big box stores:
- Lowe’s features a 12-month, 0% offer with deferred interest or 84 months (7 years) at a fixed rate of 9.99%.
- Home Depot offers a 120-month (ten-year) fixed-rate loan at 9.99%.
Financing through Acorn Finance
Acorn Finance can show you a range of personal loans for your HVAC – or any home improvement project – in seconds. You’re pre-qualified for these offers, and you can sort them by what’s more important to you, whether it’s interest rate, payment amount, or term length.
Getting pre-qualified also gives you some bargaining power, according to Wilson.
“If you go to Acorn Finance directly, there is an advantage for you to say, ‘I have Acorn in my back pocket. But hey, Mr. Contractor, what are you offering?’” he explains.
“You can say, ‘I’ve secured [for example] a 7% interest rate for ten years on my system, I’m already pre-approved,’ which is a little bit of power when you’re talking financing with the contractor. Because essentially, you have a loan. Acorn Finance pays the customer directly.”
You deserve to be comfortable in your own home. You have financing options to make that happen.
Get started with your HVAC loan application today.
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