One of the most expensive investments you can make in your home is a new HVAC system. Whether you are replacing a furnace, installing a new boiler, or considering investing in a geothermal system with an air handler, we are not talking about a few hundred dollars to buy and install these complex systems. However, for our clients, there are a few options that you can explore to help make an HVAC system replacement or installation a little easier. We are happy to work with clients to make things work, as your furnace or boiler is not going to choose a good day to break down. So, here are a few of the most common options for financing heating and cooling systems here in Ohio and Michigan.
HVAC Contractor-led Financing
One of the most common financing options for clients is to partner with the HVAC company that you are working with to finance your HVAC system. Here at Fry, we partner with a variety of lenders to ensure that our clients have access to the financing that they need. With our financing partners, our clients have access to short- and long-term loans with low monthly payments and competitive interest rates. Most HVAC companies make financing simple, and depending on your specific needs, this is normally the most flexible loan option on the market, as the vast majority of lenders have no early-repayment penalties.
Personal Loans
The next most common option for our clients is to secure a personal loan or personal line of credit from a local bank or credit union to cover the cost of the new HVAC system. If it is a personal loan, it comes with fixed rates and payments and is typically unsecured, meaning you will be paying between prime plus 4% and prime plus 8%. While if you are using an unsecured personal line of credit, you can be more flexible in terms of payments, but you will have a similar interest rate of between prime plus four to prime plus eight per cent. Both a personal loan and a personal line of credit will require good or excellent credit and an existing relationship with the banking institution.
Home Equity Loans
One of the best loan options that you can explore is a Home Equity Line of Credit, or HELOC for short. These secured loans use your home's equity to create the room for the loan itself. It works just like a personal line of credit in that you can enjoy flexible payments, and it acts as a revolving line. However, unlike an unsecured line of credit, a HELOC will have a lower interest rate and normally is around prime plus two or three per cent and is variable. To set up and qualify for a HELOC, you will need to work with your mortgage lender and bank to apply for the loan, and you will need sufficient equity in the house and good or excellent credit.
Government Programs
There are a select number of government programs that may be usable to help finance an HVAC system. This includes Federal Housing Administration loans, such as Title I or 203(k), that allow you to roll home improvements into your existing mortgage. This will not work with all lenders and mortgage types, and it is best to reach out directly to your mortgage company to confirm if you are eligible for these types of loans.
Credit Cards
Finally, there are credit cards. For the vast majority of credit card holders, you are looking at between 15 and 25 per cent of interest per month, which means that every $1,000 you put on the card with a 25 per cent interest rate, you are paying $20.75 of interest every single month. Depending on your credit rating, you could find an introductory APR card with low or no interest for a short term, like 6 months or a year. However, you will need to make larger payments, and once the introductory period is over, you could be faced with high interest rates, even as much as 30% so you will need to be extremely careful.
If you have questions about financing or want to touch base with Fry about our financing options, we are happy to take the time to chat. We have worked with thousands of homeowners just like you to provide HVAC financing and discuss the options available to you. From our own financing to personal loans and lines of credit, the right financing vehicle is available. Whether you are in Ohio or Michigan, our financing team is ready to help you out!
