The Truth About HVAC Financing

What if we told you two homeowners buying the exact same HVAC system could end up paying wildly different amounts depending on their HVAC financing agreement? In Canada, financing allows you to replace your heating and cooling system without draining your savings. 

Different financing structures bring different terms, interest rates, and long-term costs to the table, which means there’s always going to be better and worse choices for your wallet. Finding the right one might be the most challenging part, but it’s easier if you know what to look for. 

At LG Home Comfort, we’ve seen how different financing structures affect homeowners in the long term, so we design our HVAC financing options with simple terms, fair rates, and flexibility, allowing you to get the system you need without the financial headaches.

In this article, we’re pulling back the curtain on how different HVAC financing models work so that you can make a smarter decision today that your future self won’t regret. Ready to see what good financing looks like? 

Let’s get started! 

How Does HVAC Financing Work?

HVAC financing lets you spread the cost of a new heating and cooling system over time instead of paying the full amount (which we know can hurt) upfront. You’ll work with either a third-party lender, like a bank or a credit union, or the HVAC company itself in a relatively simple process:

1. Apply for financing
2. Agree to loan or payment plan (i.e. interest rates, loan terms, monthly payments)
3. Sign a contract
4. Get your new HVAC system installed
5. Make monthly payments until it’s paid off

With the right provider, HVAC financing models can be helpful when you need a new system now but want to manage the cost through convenient monthly payments. After all, you need reliable heating and cooling year-round in Ontario. 

Here’s what to keep in mind: when you’re dealing with a broken system, it’s natural to focus on getting it fixed quickly. However, different financing options can result in significantly different long-term costs, so it’s essential to understand what you’re signing up for beyond just the monthly payment.

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Common HVAC Financing Options

There’s no shortage of ways to finance a new HVAC system—banks, credit unions, personal loans, and even credit cards. However, many people choose the path of least resistance and go with whatever the independent dealer or retailer offers on the spot. 

This section covers the most common in-house HVAC financing options and how to spot the best deal for you:

HVAC Rental Agreements

HVAC rental agreements are prevalent in Ontario, often marketed as a “hassle-free” way to install a new furnace, air conditioner, or water heater. As far as HVAC financing options go, rentals are most appealing when you’re in a pinch.

If you’re considering HVAC rental agreements, always read the fine print and review the terms. Some homeowners have encountered issues such as:

• Liens or security interests placed on homes without the owners’ knowledge (the $5 million class action lawsuit against Crown Crest Capital, for example), which can cause problems if you try to sell or refinance your home
• High interest rates and hidden financing fees, like administrative fees, maintenance fees, or penalties for early contract termination
• “Fixed” payment terms that increase yearly (by 3.5% or more if accounting for inflation)
• Hefty buyout fees (for when you want to end the contract), reaching double or triple the equipment value

Long-Term Loans

When you finance new HVAC systems, you may come across loans that look like a good deal at first but then balloon to unmanageable costs over time. These heater and air conditioner financing options emerged when rental agreements began to receive a bad reputation. 

These long-term HVAC financing models span 15-20 years and offer low monthly payments. But if you do the math, you’ll realize you’re paying two to three times more than the system is worth—and that’s before interest hikes or hidden fees!  

Even worse, by the time you end your contract, your heating and cooling system is likely outdated, inefficient, and no longer under warranty. So, while these AC and furnace financing models are probably easier on your wallet, the overall payments cost you way more. 

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Long-Term Loans with Short, Locked-In Rates

Another common HVAC financing option is the so-called “promo rate” loan, which promises low payments for an initial period but shifts to higher rates later on. These loans often feature low interest rates or fixed rates for the first three to five years, with increased payments or variable rates taking effect afterward.

What happens is that after the initial lock-in period, your loan switches to “market rates,” which are often double or more than the introductory rate. Currently, the market rate sits at 13%, so you can imagine how quickly these payments accumulate if you’re not prepared. 

In some cases, total repayment can exceed the original cost of the system by a significant amount. We’ve seen examples where homeowners pay $40,000 for a $10,000 unit.

That said, these HVAC financing options can still work for some homeowners, especially if you plan to pay off the balance early or refinance before the rate adjustment. Just be sure to read the complete terms from the start and choose a plan that aligns with your financial goals.

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Why HVAC Financing Terms Matter

When homeowners finance a new HVAC system, they often zero in on the monthly payment to ensure it fits their budget. The problem is, unlike a mortgage where you can sell your home if needed, HVAC systems are often sunk costs with minimal (if any) resale value. 

So, getting 20-year loans (even with fixed, competitive rates) presents some glaring issues:

• Most HVAC warranties only last 10 years. If your system breaks down in year 12, you’ll be stuck paying for repairs and loan payments out of pocket. In the worst-case scenario, you might need to replace the entire unit while still paying for the old one! 
• Inflation and rising service rates mean repair expenses could be significantly higher when your loan matures.
• Newer, more efficient models hit the market every year. Your 15- or 20-year-old system will be outdated, inefficient, and far costlier to maintain by the time you’ve finished paying for it. 

The best way to finance a new HVAC system is to match the loan term to your equipment’s lifespan and warranty period. LG Home Comfort’s 10-year fixed loan does just that. Our HVAC financing allows you to own your unit while it’s still under warranty, so you never have to pay for repairs due to equipment failure.

Stop Renting, Start Saving with LG Home Comfort

The True Cost of HVAC Financing

HVAC financing options are designed to ease the upfront cost of a new HVAC system, but some deals come with more strings than support. The above AC, water heater, or heat pump financing models often result in higher overall costs, sometimes charging more in interest than the actual value of the equipment. 

As consumers, you shouldn’t be paying more than you should. LG Home Comfort offers a straightforward 10-year loan with predictable payments and no hidden fees, so you know exactly what you’re paying for. 

Here’s how our HVAC financing compares to other models:

Calculate How Much You Could Save With LG Home Comfort

The Best Way to Finance a New HVAC System

Looking for HVAC financing that works in your favour? LG Home Comfort offers the best financing options for HVAC systems in Ontario. Our family-run company takes a human approach to business, focusing on practical solutions and clear communication so you can make the choice that’s right for your home and budget. 

We offer:

• A fixed 10-year loan with predictable payments and no surprise rate hikes
• Full ownership of your system at a lower total cost than rentals or long-term loans
• Payment terms structured around the manufacturer’s 10-year warranty
• Honest, transparent pricing

Our team can also help you receive rebates and incentives while reducing your utility bills by up to half. With LG Home Comfort, you can finance your new AC, water heater, heat pump, or water purification system with confidence. 

Ready to get the best HVAC financing deals possible? Book a consultation today to learn more about owning your system while saving up to $10,000!