HVAC systems play a very important role in cleaning, cooling, and heating the air inside your home. Unfortunately, they can be a bit of an investment due to their high price. For those who do not want to pay the full cost all at once, financing might seem like a helpful solution. Is it really a good idea to use financing for your new system? Here are some questions you need to ask before you can tell if HVAC financing is right for you.
How Does HVAC Financing Compare to Cash or Credit Payments?
To figure out whether or not you should do HVAC financing, it is helpful to see how it actually compares to other forms of payment. In almost all cases, paying the full cost of the system upfront is preferable. If you do have the funds to pay for your system now, you should probably do that instead of financing your HVAC installation. The benefit of paying upfront is that you do not have to pay extra for interest or fees. It is also simpler since you do not have to remember to schedule payments. The only reason to go with financing when you have funds available is if you expect to have another use for those funds soon. For example, you might want to finance your system and keep your savings just in case you lose your job or have emergency medical bills.
Some people skip financing because they think they can just put their HVAC system on their credit card. This is rarely a sound financial decision. The problem with putting financing on your card is that credit cards are intended to handle short-term debt not long-term debt. If you cannot pay off the HVAC system in a few months, you can end up paying a ridiculous amount of interest and harming your credit score. Financing is set up to be a stable loan that keeps interest rates low until you can pay it off. In the long run, financing interest rates are usually lower than credit card interest rates, so you save money by financing.
What Are Your Current HVAC Needs?
When making your decision, you need to stop and think about what you really need. An HVAC system is an absolute necessity in Arizona for most of the year. If your system is completely broken beyond repair, the situation qualifies as an emergency that you should address immediately. In these cases, financing is a good idea because it lets you solve the problem even if you do not have the funds to purchase a new system right that second.
If your system is just a little faulty though, things get a bit more complicated. When your HVAC unit is more than 10 to 15 years old but still functioning properly, you might have some time to save up funds before you need to get a new one. If your machine is broken but can be repaired cheaply, you might also want to hold off on the financing. Generally, if you can wait a little while and save up money to do a cash purchase, there is no reason to finance your system. Another potential reason to wait and save instead of going with the financing can be if the current weather is pleasant enough that you do not need an HVAC system.
It is also a good idea to consider your HVAC options. A reputable HVAC company can examine your home and discuss the different types of systems that would suit your climate, family size, and heating and cooling preferences. If you let them know that cost is a concern, they may be able to suggest budget-friendly systems. However, something to think about is the fact that the cheapest option is not necessarily the best. Using financing to get a slightly higher-end machine can help make your home more energy-efficient and reduce the need for repairs.
What Is Your Current Financial Situation?
Before making any financial decision, you need to take a look at your current income, debt, and savings. Get an estimate for how much you would have to pay each month to finance your system, and then add it to your other expenses. If you can comfortably pay for housing, food, medical care, and the financing payments each month, then financing is probably a good idea. In a situation where you have some savings and a stable income, financing can help you get the new system you need without requiring you to save up for months.
If your finances are a bit less stable, you might want to rethink financing. It is a very helpful tool for those without savings, but financing does mean you are committing to spending a certain amount each month. You may want to hold off on financing if your income is already low or your debt is very high. Taking on even more debt than you can handle for a non-essential purchase is a poor decision. Unless your current HVAC system is completely nonfunctional, you should hold off on the new purchase.
Is This Financing Offer a Good Deal?
It is important to realize that not all HVAC financing is the same. While it might be a bad idea to get financing through one company, it might be a good decision to finance your system with a different company. Therefore, you need to carefully consider your options before making your choice. HVAC financing has a variety of different terms and conditions involved.
The things you need to pay the most attention to are interest rates, fees, and loan terms. A lower interest rate will help you save money in the long run because it means the total cost will be lower. Ask whether the interest rate is fixed or adjustable, since some companies may change the interest rate as the period of the loan progresses. Typically, shorter loan terms of around 30 to 60 months will also save you money, though they will also require you to pay more each month. Finally, consider the fees. Some companies may tack on a lot of fees that end up making their financing offer pricier. Make sure to check and see if there are fees associated with late payments or paying the loan off earlier.
In general, the best decision is selecting financing that has a monthly payment you can afford and reasonable rates and fees that save you money in the long run. However, just picking the cheapest possible financing offer is not always a good idea. Remember that you are also picking an HVAC provider when you select your financier. Working with a reliable company or selecting a trusted HVAC brand may be worth the slightly higher costs.
If you are a Buckeye resident considering HVAC financing, Sun City Mechanical is happy to provide financing at a fair and reasonable price. In addition to HVAC installations, we also help out with a variety of other repairs and maintenance services for HVAC and plumbing products. Give us a call today to learn more about our services.