What’s the Best Way to Finance a New HVAC System?

By Anne Fonda

When it’s finally time to replace your old and failing HVAC system, sticker shock can send you into a mild panic. Rest assured, there are ways to finance a new HVAC system that can make the expense more manageable. The best way to finance a new HVAC system will be different for each homeowner, based on your individual circumstances.

Let’s take a look.

Reduce the amount you have to finance by taking advantage of financial incentives and making a down payment. Some of your money-saving options include:

The Inflation Reduction Act (IRA) of 2022 offers an HVAC tax credit that falls under the umbrella Energy Efficient Home Improvement Credit (25C). These energy tax credits are:

The federal tax credits are available to homeowners in every state and are not tied to your income. They are good for systems installed before December 31, 2025.

Heat pump rebates are also offered under the IRA, with programs being administered by the states. Not all states have rebate programs, and the amount you might qualify for is dependent on your income. Maximum heat pump rebates are $8,000.

Many regional and local utility companies also offer rebates on the purchase of an energy-efficient HVAC system. Visit your provider’s website for specifics. Your HVAC dealer can also help with this information.

Many HVAC manufacturers, including American Standard, offer manufacturer’s rebates on some of their most energy-efficient heating and cooling units. These are typically offered in the spring and the fall.

If you have a home warranty, check to see what it says about your HVAC system. Many home warranties will cover certain HVAC repairs and may help cover HVAC replacement if that’s a better option.

Finally, you can lower any monthly payments by making a down payment. If you have savings set aside in an emergency fund, now is the time to use some of that money. If you’re expecting to get a tax refund or a year-end bonus, earmark that money for a down payment.

Most financial advisors would tell you not to pay all cash for a new system, even if you have it. You could invest that money in a high-yield savings account or CD ladder and earn a return, while still making payments.

When you’re getting quotes on a new HVAC system, in addition to getting system recommendations and a quote, ask about new HVAC system financing. Many HVAC companies offer it, but the interest rates and requirements will vary.

That will vary based on the type of financing. For some, you will need good to excellent credit, while for others, you may qualify if your credit is less than good.

There are 4 main options for AC financing, heat pump financing, furnace financing, or financing an HVAC system. These include:

Each option has benefits and disadvantages. Let’s take a look.

The best way to finance a new HVAC system for many homeowners is to do it through their HVAC company – in this case, American Standard.

American Standard currently has a special HVAC financing offer to make getting the high-efficiency, energy-saving, and durable system you want more easily. We’ve teamed up with Wells Fargo Bank N.A. to offer a special Wells Fargo Home Projects credit card with 0% APR for 60 months with equal payments. This offer is available exclusively through participating Customer Care dealers.

To qualify, you need to apply with Wells Fargo and have approved credit. The 0% APR makes this method of financing HVAC projects very attractive as long as you can make your monthly payments and pay the card off before the promotional period (60 months) ends. 

Homeowners with fair, good, or excellent credit (640 or higher scores) and steady income may qualify for a credit card with a 0% interest promotional period. The higher your credit score, the more likely you are to be approved.

Let’s look at some hypothetical monthly payments. For example, assuming you didn’t use the card for any other purchases:

Rolling your HVAC installation and payment plan together can be a convenient way to finance a heating and air conditioning system if it's also the most affordable one.

Fine print warning

Since this is a credit card that will be fully maxed out when you receive it, your credit score will take a hit. But your numbers will improve as you begin to make monthly payments. 

*Be sure to pay the card off before the 5-year promotional period ends. If you don’t pay it off on time, you will be hit with interest charges at an APR of 28.99%. The interest rate will apply to any unpaid balance and any future purchases.

You can apply for a personal loan with your bank, local credit union, or an online bank - no need to look for HVAC financing near me. Interest rates will vary depending on where you live, whether you have a previous relationship with the lender, how large you want the home improvement loan to be, your credit rating, debt-to-income ratio, and more. 

You will still need to make fixed monthly payments. Repayment periods are generally 2 to 7 years. A longer repayment period will mean lower monthly payments, but the highest total payment because of all of the extra interest payments.

Fine print warning

Watch out for the following when considering applying for a personal loan.

If you default on the loan, it can seriously damage your credit score, and if the loan was secured with collateral (such as a car), the lender can seize that to help pay what they are still owed.

As a homeowner, you may also choose to look at applying for a home equity loan. If you have lived in your home for several years and made on-time monthly mortgage payments, you will have likely built up some equity in your home. Home equity is the amount your property is currently worth, minus the mortgage amount (if any).

A home equity loan is a second mortgage on your home. To qualify for a home equity loan, you generally must have at least 15% equity. Home equity loans generally have a fixed interest rate that will vary based on your lender, location, and financial circumstances.

Repayment terms can last from 5-30 years, depending on the lender. The longer you take to repay the loan, the smaller the monthly payments, but the more interest you will pay.

Fine print warning

Watch out for the following when considering a home equity loan for the following.

A HELOC, or home equity line of credit, is similar to a home equity loan in that it uses your home as collateral. It’s also a second mortgage on your home. But a HELOC is also like a credit card. There’s a total loan amount, but you only borrow/use it for what you need, then pay it off and borrow again as needed. HELOCs generally have a 10-year draw period and a 20-year repayment period.

Fine print warning

Watch out for the following:

Using a HELOC can be a good solution to finance a new heating and cooling system if you have a lot of home equity and steady employment. If you’re more comfortable with fixed payments, one of the other three HVAC financing options carries less risk.

Make sure you understand the financial implications of any type of HVAC financing. Make sure you understand the amount of the monthly payment, payment due date, interest rate, loan or payment period, etc. Read the fine print. The best way to finance a new HVAC system will depend on your financial situation.

If you’ve made the smart decision to go with an American Standard system, financing your new HVAC system is easy. We’ve partnered with Wells Fargo Bank, N.A. to provide 0% financing for 60 months through participating Customer Care dealers.

Anne Fonda

LinkedIn

A Content Writer with Trane Technologies, Anne Fonda researches topics and writes for Trane® and associated residential HVAC brands. She works in collaboration with Trane Technologies subject matter experts, offering easy-to-understand, informative content on complex topics. Her goal is to help consumers make informed decisions on the products and services they need. 

She has written for HVAC and other service provider websites for over 16 years. Before transitioning to web content writing, Anne had a 14-year stint as an award-winning journalist. She graduated cum laude from the University of Missouri-Columbia School of Journalism.  

When she’s not working, Anne enjoys playing word games, reading, gardening, spending time with family, and visiting gardens and museums.

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