Investing in a new, energy-efficient heating and cooling system for your home is one of the best ways to lower utility bills and maximize comfort. But upfront costs for premium HVAC equipment can be daunting.
That’s where HVAC financing enters the picture. With the right loan or financing plan matched to your budget, you can pay for a new air conditioner, furnace, or heat pump system over time. But how do you know what the best HVAC financing options are for you?
This comprehensive guide covers everything you need to know about financing options for your next HVAC purchase and installation. You’ll learn:
- Estimated HVAC system costs and financing amounts needed
- Pros and cons of different financing options like loans and payment plans
- Tips for comparing offers and rates
- Minimum credit score requirements
- Ways to get the lowest monthly payments
- Expert advice for making your HVAC investment affordable
Let’s explore the best financing strategies so you can install an efficient system that keeps your home perfectly comfortable for years to come!
What Is HVAC Financing?
HVAC financing refers to borrowing methods that allow you to pay for new heating and cooling equipment over an extended time period, typically 6 months to 7 years. Financing makes expensive HVAC projects and upgrades more budget-friendly by spreading out the investment over months or years to match cash flow.
HVAC financing options generally fall into two main categories:
Loans – These include bank loans, manufacturer loans, home equity loans and lines of credit. You receive the full loan amount upfront and make monthly payments including principal and interest charges until it’s paid off.
Payment Plans – With these plans, you pay the contractor directly over a defined period, often interest-free. Plans may be offered by HVAC companies or equipment manufacturers. Zero percent financing for 12-18 months is common.
Loans allow bigger dollar amounts but mean taking on debt. Payment plans avoid borrowing and interest but may lack longer durations. We’ll explore the pros and cons of financing methods later in this guide.
How Much Does It Cost to Install a New HVAC System?
The cost of a new furnace, air conditioner, or heat pump depends on:
- Type and size of equipment needed for your home
- Efficiency and features of system purchased
- Additional costs like ductwork modifications, thermostats, etc
- Complexity of installation and trade rates in your area
According to HomeAdvisor, here are typical price ranges for HVAC equipment installation:
- Gas furnace replacement – $4,000 – $12,000
- Air conditioner replacement – $4,000 – $11,000
- Heat pump installation – $5,000 – $20,000
High-end systems, extensive ductwork improvements, and challenging installations can exceed $20,000 altogether.
On average, you should budget $10,000 for a complete new HVAC system installation. This covers a mid-range efficiency 14 SEER AC and 96% AFUE furnace for a typical 2,000 sq ft home.
Keep in mind potential utility rebates and tax credits will offset the total investment as well.
Compare Personal Loan Rates
With estimated costs in mind, let’s look at current interest rates for major financing options homeowners use for HVAC projects.
Here are average APRs as of March 2023:
- Banks – 8% to 18%
- Credit unions – 6% to 14%
- Manufacturer/HVAC loans – 0% to 9%
- Credit cards – 16% to 22%
- Home equity loan – 7% to 8%
- Home equity line of credit – 5% to 6%
Rates you may qualify for depend on credit score, debt-to-income ratio, collateral, and other factors. Having excellent credit in the 800s can mean rates as low as 3% to 5% from some credit unions.
But subprime borrowers with scores under 600 should expect rates from 18% to 30%. Lenders view you as a higher risk, so interest charges compensate them accordingly.
Now let’s dive into details on the most common and affordable financing options for HVAC projects.
Best HVAC Loans and Financing Options
Which financing strategies offer homeowners the lowest rates and monthly payments for installing new air conditioning, furnaces, heat pumps or other HVAC equipment? Here are the main methods to consider:
HVAC Company Payment Plans
Many heating and cooling contractors offer payment plans that allow you to pay over 6 months to 5 years or longer. Offers vary, but 12 months no interest is common. Payments are made directly to the HVAC company.
Pros
- Plans adjusted for your budget needs
- No interest charges mean lowest total cost
- Avoid loan applications and credit checks
Cons
- Shorter terms than bank loans
- Remaining balance due if canceling mid-project
Manufacturer Financing Programs
Top brands like Trane, Carrier, Rheem, Lennox, and Daikin offer financing promotions through partnerships with lenders. Offers include discounted APRs, deferred interest promotions, and incentive rebates.
Pros
- Deferred interest periods up to 18 months
- Pre-qualified offers through participating dealers
- Competitive rates from familiar lenders
Cons
- Short deferred interest periods
- High retroactive interest if balance not paid in full
Wells Fargo HVAC Financing
Wells Fargo offers tailored loans for HVAC projects at fixed rates as low as 7% APR. No collateral required. Terms up to 84 months are available through participating HVAC dealers.
Pros
- Fixed monthly payments
- Competitive rates without home collateral
- Longer terms such as 7 years (84 months)
Cons
- Hard credit inquiries may temporarily lower score
- Monthly payments don’t decrease over loan term
Banks and Credit Unions
Banks and credit unions provide personal loans at rates starting around 6%. Approval and rate depend on credit score and debt-to-income ratio. Owning a home lowers risk.
Pros
- Competitive rates with good credit
- Online loan applications are convenient
- Fixed monthly payments
Cons
- Minimum credit scores around 680+
- Requires hard credit check
- Lower maximum loan amounts
Home Equity Loans and Lines of Credit (HELOCs)
Home equity loans allow borrowing against existing home value at rates around 5% to 8%. HELOCs offer variable Draws as needed at rates around 4% to 6%.
Pros
- Interest may be tax deductible
- Competitive rates by using home as collateral
- HELOCs provide flexible draw capability
Cons
- Risk losing home if unable to repay
- Closing costs and appraisal fees apply
- Variable rates on HELOCs carry some risk
Credit Cards
Many homeowners use credit cards like Chase Slate or Citi Simplicity to finance HVAC equipment. These offer 0% intro APRs for 12 to 21 months.
Pros
- Easy to qualify if you have fair+ credit
- 0% intro promotional periods on purchases
- Points and rewards potential
Cons
- Deferred interest – balances due in full to avoid high retroactive interest
- Larger purchases exceed standard credit limits
- Putting taxes/insurance escrow at risk with high balances
Tips for Comparing HVAC Loans
Narrowing down the most affordable financing option involves:
- Getting multiple quotes – rates vary between providers
- Calculating APR differences over the full loan term
- Comparing total costs including fees like origination charges
- Making sure you can pay off balances before promotional periods expire
- Understanding the terms – loan length flexibility is key
Work closely with your HVAC contractor to explore promotions and financing partnerships they make available. This expedites the process considerably compared to direct bank applications.
Best Ways to Finance HVAC Systems
Based on current rates and terms, here are my top recommended financing strategies for HVAC projects:
Best Overall – Wells Fargo HVAC Loans
Shorter Term – HVAC Company Payment Plans
Tax Benefits – Home Equity Loans
Flexible Fund Access – Home Equity Lines of Credit
Hardship Needs – Manufacturers Special Financing
This combination gives you short, medium, and long-term repayment options at the lowest rates possible based on your credit and budget needs.
And if your credit needs improvement, special plans from HVAC brands can provide easier access, so don’t hesitate to ask about them.
Do HVAC Companies Offer Financing?
Partnering with HVAC contractors who offer financing plans and assistance is key. It provides major advantages:
Simple Application – Apply onsite rather than at banks. Approvals within minutes in many cases.
Tailored Terms – Repayment options to match your budget – often interest-free.
Leverage Relationships – Contractors have pre-approved offers from brand partners.
Peace of Mind – Payments go to the contractor doing the work.
Discuss financing upfront so you know all available options before project completion. Having a plan in place early makes payment smooth and worry-free.
What Credit Score Do You Need to Finance an HVAC System?
The minimum credit score to finance HVAC equipment generally falls in these ranges:
- 12-18 month no interest payment plans – 620+ score
- Manufacturer loans – 640+
- Wells Fargo HVAC loans – 640+
- Home equity loans – 660+
- Credit union personal loans – 680+
- Lowes, Home Depot – 700+
While you can qualify for equipment loans starting around 640, interest rates drop substantially for borrowers with scores over 740. So excellent credit means big interest savings.
Even if your score is under 600 currently, take steps to boost it before applying so you access better HVAC financing rates.
How Much Should a New HVAC System Cost?
Here are price ranges you can expect for complete new HVAC system installations based on home size:
1,500 sq ft House
- Entry-level – $5,000 to $8,000
- Mid-range – $8,000 to $12,000
- High-end – $12,000 to $15,000
2,500 sq ft House
- Entry-level – $7,000 to $10,000
- Mid-range – $10,000 to $15,000
- High-end – $15,000 to $20,000
4,000+ sq ft House
- Entry-level – $10,000 to $14,000
- Mid-range – $14,000 to $20,000
- High-end – $20,000+
Of course, many factors like equipment needed, materials, labor, permits, etc impact final costs. Get multiple quotes to compare pricing for your particular home.
What Is the Best Time of Year to Buy an HVAC System?
While emergencies happen anytime, the ideal time for planned HVAC replacements is early fall or spring. Benefits of off-peak installation include:
Incentives – Manufacturers and utilities offer rebates on new systems to incentivize off-season purchases.
Contractor Availability – Installers have more flexibility scheduling projects when not in high demand.
Favorable Rates – HVAC financing offers and payment plans are often better at slower times of year.
Peace of Mind – New systems are operational by next extreme weather season.
Careful planning ensures your installation occurs when most convenient for you and cost-effective based on available promotions.
Summary: Best HVAC Loans and Financing Options
The key takeaways when selecting financing for a new air conditioner, furnace or other HVAC system:
- Compare multiple lenders to find the lowest rates and fees
- Understand all terms and implications – walk away if uncertain
- Consider HVAC company payment plans for fastest approvals
- Check for available manufacturer promotions and rebates
- Improve credit score to access better interest rates
- Make sure monthly payments fit comfortably within your budget
With smart financing strategies, investing in home comfort, energy efficiency, and utility savings becomes affordable and worry-free. Partner with the right HVAC contractor to turn your HVAC dreams into reality.
