How to Finance an HVAC System
While each major home appliance has its advantages, HVAC systems are practically essential if you want to maintain a high level of comfort in your home. HVAC units typically cost anywhere from $3,000-$10,000. If you want to purchase a modern unit that offers the best energy efficiency on the market, you might need to obtain financing for your system. When you combine financing with rebates and tax credits, the upfront costs will be reduced substantially. After your system of choice has been selected, we can install it for you.
What Is an HVAC Loan?
An HVAC loan is a type of unsecured personal loan that you can use to purchase an HVAC unit for your home. Unsecured loans are ones that must be backed by collateral. However, the HVAC unit isn’t used as collateral. Instead, your credit score is. All of the qualification requirements that typically apply to standard loans will also apply to financing for an HVAC system.
HVAC Financing Requirements
Even though requirements for unsecured loans differ with each lender, the majority of lenders take your debt-to-income ratio, credit report, and income into account.
Your credit history, usage, and score are among the most important factors in determining if you’ll be approved for HVAC financing. These details impact the loan terms, rates, and amount that may be given to you. A better credit score might result in lower interest rates.
If you want to maintain your credit score, check your credit profile on a regular basis. Credit scores are calculated based on any credit activity, which is why it’s also beneficial to dispute any errors on the report that might adversely affect your credit score.
When lenders assess loan applications, their goal is to make sure that you can repay the financing, which is why a borrower’s income level is always considered. The amount of income you bring in can also dictate the rates you qualify for.
Higher income typically leads to better rates. Income can also determine how much lenders allow someone to borrow. This isn’t often the case with HVAC financing since the loan amount is on the lower end of the scale.
Preferred Debt-to-Income Ratio
Another factor that lenders often consider is debt-to-income ratio. This calculation compares the level of debt that a borrower has to the amount of income they bring in. When a debt-to-income ratio is lower, lenders will be more favorable. The preferred ratio for lenders is usually around 50% or lower. However, the ratio that the lender will accept can differ depending on the loan amount that’s being requested.
Additional Financing Considerations to Keep in Mind
There are many additional considerations that you should keep in mind when looking into HVAC financing, which include everything from APR to monthly payment. APR stands for annual percentage rate and is a yearly interest that’s charged to borrowers. A low APR usually leads to a lower monthly payment. The loan’s repayment period is the amount of time the borrower has to pay off their loan.
Shorter terms usually result in higher monthly payments as well as a lower APR. Some lenders provide discounts if the borrower already has a relationship with them. As for the monthly payment, this amount must be repaid each month with interest. If the repayment period is longer, the monthly payment will likely be lower. The repayment period for a personal loan often ranges from 12-60 months. However, the amount of interest that’s paid by the end of the loan term is higher.
If you need to upgrade to a new HVAC unit but would prefer to finance the system and pay it off over time, our team at AirDepot can help you find the financing solution that best accommodates your needs. We offer installation and repair services for any type of heating and cooling system that might be installed in your Cypress, TX home.
When your HVAC system isn’t functioning correctly, we can diagnose the problem and help you decide if the system should be repaired or replaced. Our team is also capable of installing indoor air quality devices that will remove contaminants from your indoor air. Call us today to request service or learn more about the financing options we offer.