Personal Loans

HVAC Need Repair or Replacing? Review Your Financing Options Here

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For many, HVAC, or heating, ventilation and air conditioning systems, are an essential part of keeping their home at a comfortable temperature while circulating air and improving overall air quality. When those systems start to break down, the thought of financing repairs—or replacing the entire system—can be daunting.

But at the end of the day, it’s a necessary expense that comes with homeownership. Here’s what to know about your HVAC financing options, whether you’re dealing with smaller repairs or a total replacement.

Cost to repair your HVAC

Most homeowners spend between about $150 and $550 on air conditioning unit repairs, while furnace costs can run from $132 to $456, on average. Some common issues you may deal with include refrigerant leaks, dirty air filters and issues with HVAC-related sensors and thermostats. Before paying for any repairs or new parts, it’s always a good idea to check if you have a warranty that could cover the cost.

The key to avoiding costly repairs or a total replacement is regular maintenance. It’s important to watch for signs that the system needs repairs so that you can get it taken care of right away. Some of the signs you’ll want to watch out for include:

  • Poor airflow
  • Odd smells or sounds
  • Lack of cold air when you use the A/C
  • Unusually high electricity bills

Cost for a new HVAC system

The overall cost for a new HVAC system will depend on the brand you choose. But in general, costs for a totally new system can run anywhere from about $2,000 to $5,000.

Keep in mind, however, that the installation costs will be added on top of those base prices. The cost of installation will vary by location as well as the size of your house, and can range from about $9,000 to $12,500 for the installation of a total HVAC system replacement. It will cost even more if you add on features beyond those that come with a new system.

Other factors that will impact your overall costs include the amount of ductwork required for your residence and the overall difficulty of the project. If it’s difficult to get to the area where your new air conditioner will go, for example, that will affect how much it costs to install it.

HVAC financing for great credit

Personal loan: A personal loan can be used to finance a wide variety of purchases, including a new HVAC system. To qualify for this kind of loan, you’ll generally need to be able to demonstrate that you can repay the loan. Although those with bad credit may still be able to qualify for a personal loan, keep in mind that the best rates are generally reserved for borrowers with excellent credit.

For example, among borrowers with credit scores of 720 or higher, the average rate was 7.27% in the first quarter of 2019, compared to 136.50% for those with credit scores below 560. If you’re interested in a personal loan, many lenders offer prequalification, which is a good way to compare loans that won’t impact your credit score.

0% APR credit card: A 0% APR credit card is another solid option for people with good to excellent credit. For those who are able to pay off the debt before the introductory rate expires, this amounts to an interest-free short-term loan, provided the card doesn’t have an annual fee.

However, if you aren’t able to pay off your balance in full by the time the introductory APR ends, you’d start paying the regular rate. And, depending on the card, that can be anywhere from 15% to 25%. So if you qualify and are considering this option, it’s important to consider whether or not you can pay it off during that introductory period before going forward.

Paying in cash: This is hands down the best way to pay for any major expense, because it doesn’t require you to take out debt, minimizes your total costs and won’t impact your future budget. It’s also theoretically available to anyone who has a high enough income to put some of it aside each month, regardless of credit score. However, this requires a fair bit of foresight and isn’t always an option for everyone.

HVAC financing for bad credit

Secured loan: A secured loan requires the borrower to put up assets as collateral. If you were to miss a payment, you could be at risk of losing whatever you put up as collateral. Although a secured loan is less credit dependent than a traditional unsecured loan, it will likely still require a credit check to get one. The borrowing limits are generally higher than you might find with an unsecured loan because the lender has the security of that collateral to fall back on.

The potential to lose your collateral does make an unsecured loan a somewhat risky option for most borrowers. However, for those who are able to stick to the repayment schedule faithfully from start to finish, this can be a good way to get your hands on a loan, even if you don’t have great credit.

Payday advance: These are just what they sound like — some employers, or companies like Earnin, allow people borrow against their future earnings, potentially interest-free. The borrowed amount would then be deducted from your income in your next paycheck (or over multiple paychecks, depending on how much was taken out). It may not require a credit check to qualify.

However, this is only a good option for borrowing small amounts, as it can otherwise potentially wipe out your income in the foreseeable future. Depending on the method you choose, the maximum borrowing amount may be limited to just $100, which is far less than what’s needed to cover most HVAC repairs.

Payday loan: Payday loans are, on average, an incredibly expensive financing option, and can come with interest rates higher than 300%. They usually have a short term, typically maxing out at the two-week mark, and are capped at around $500. If you absolutely need a small, short-term loan, and know you can repay it very quickly, this may be an option to consider. But for most people, it is not a good option and should be avoided.

Payday alternative loan: These loans, also known as PALs, provide a much safer, better option than payday loans. Payday alternative loans are loans that function somewhat similarly to payday loans in that they’re short-term, but are provided by federal credit unions. In general, they have repayment terms of one to six months, with amounts ranging from $200 to $1,000. Interest rates typically range between 18% to 21%, and you may also have to pay an application fee of up to $20 for these loans.

You’ll need to be a credit union member, in some cases for several months, before you can apply. Those who are interested should contact their credit union to see if this is available, and get an idea of the credit requirements.


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