When your heating, ventilation and air conditioning (HVAC) system needs to be replaced, it’s probably not giving you heat or cool air — or it has quit completely. Still, whether or not to purchase a new HVAC unit is usually an easy decision. While repairs can certainly be made if the problem is manageable, even the most faithful of HVAC units give up the ghost at some point, usually when they become 15 to 25 years old. Then there is no getting around that they’ll need to be replaced.
However, new HVAC units can cost up to $5,000. Most people don’t have that kind of cash laying around.
Should you obtain financing for your HVAC unit? That’s a very good question. It depends on your circumstances, environment and the financing options you have available. Let’s look at all those factors.
Here are a few things to consider when you’re deciding whether or not to finance your HVAC system:
If you choose to finance your new HVAC unit, you will be taking on debt that will require a monthly payment to pay off. That means the first item of business in making a decision is to review your current expenses and debt. Is your monthly outgo for rent or mortgage, utilities, groceries and so on plus any debt repayment manageable? If so, financing an HVAC may be a very good decision.
But if you’re just making ends meet every month, taking on more debt may not be a wise move. Review your expenses and debt payments to see if any item can be reduced sufficiently to allow you to finance an HVAC unit.
Determine the current status of the HVAC unit. If it’s old and not working, it may not be salvageable. But if you were having routine maintenance done and were told that it should be replaced soon, you may be able to save before you have to invest in a new one.
Consider the season as well. If your heat and air conditioning are separate, that may give you some breathing room. If your heat needs to be replaced, but it’s May, you may be able to have a new heating unit installed in September and be just fine. Conversely, if you need a new air conditioner, but it’s October, it may be months before you need it again. You can save for a new unit over those months.
The climate in your region is a crucial factor in deciding whether or not to finance a new HVAC unit. If your unit isn’t working at all, and you are in the midst of a cold winter, you need a heating system. It’s not optional. Not having working heat can threaten the lives of everyone in the house.
Though air conditioning may seem like a comparative luxury, it is just as important to life and health if you live in a very hot climate, especially if your household includes babies or the elderly.
If your climate is more moderate, you may be able to work out a system with portable space heaters and fans until you can save. But if you need heat or air conditioning when your area’s climate requires it, it’s wisest to finance.
If you ultimately decide that you need an HVAC system now, it’s time to determine the best financing provider. Call around to find out a ballpark price for the unit, including installation and labor.
Fortunately, there are multiple financing options:
Ye olde credit card is a handy option for many people who need a big-ticket item. Be sure to consider the impact on your credit score, though. Thirty percent of your credit card score is the amount you owe. Charging a large amount has the potential, then, to lower your score. Look carefully at your annual interest rate as well. The lower it is, the less you’ll pay.
If you don’t have a credit card or want to shop for more advantageous interest rates, banks have multiple loan options. You can apply for a personal loan for a large-ticket item. If you have equity in your home, you can apply for a home equity loan or a home equity line of credit (HELOC). Be aware that interest on these last two loans is no longer tax-deductible under the new tax law.
Dealers or retailers like big box stores frequently offer financing for HVAC units. The three largest dealers in the space are Goodman, Lennox and Trane. Retailers such as Sears and Home Depot also have financing programs. Be sure to explore the interest rates and any down payment to get the best deal.
Your municipality or state may offer loans for HVAC units, especially if they will increase energy efficiency. The U.S. Federal Housing Administration (FHA) may offer loans for qualified homeowners.
A nonfunctioning HVAC unit can be an emergency or simply need a repair. Once you determine whether or not it must be replaced, consider whether to finance it. Be sure to review the options carefully to get the most advantageous financing available.