How to Pay for a New Furnace

With temperatures falling, many homeowners begin to think about heating their homes. Installing a new furnace is expensive, but it guarantees added comfort and energy savings for your home. Paying for a whole new furnace is no small matter, especially if you weren’t expecting to need one anytime soon. In this article, we examine how to pay for a new furnace. 

How to Pay for a New Furnace

When exploring how to pay for a new furnace, consider the typical costs, financing options, and assistance programs. If you like to be prepared and plan ahead, this guide is sure to help you make an informed decision.

Cost of a New Furnace

So, if you are left with no option but to install a new furnace, the question arises: How much will the installation cost? The answer can vary depending on the brand and type of furnace, how energy-efficient it will be for your home, and all other installation expenses. A standard furnace installation can cost an average of $2500 to $7500, while a high-efficiency or ultra model can cost over $10,000. 

Cost differences are also governed by fuel type. Whether you choose natural gas, propane, electric, or oil, pricing varies by region. A high-efficiency gas furnace might be more expensive when you buy it, but over time, the energy savings will likely pay for itself.

Additional costs include installation labor, ductwork adjustments, removal of old furnaces, and any extra upgrades to meet energy standards. 

Knowing the overall cost and savings from a high Annual Fuel Utilization Efficiency (AFUE) alternative can help determine which furnace would work best for you.

Exploring Financing Options for Your New Furnace

When you know what your new furnace will cost, consider financing options to help make payments more manageable during the colder months. Most furnace sales and service professionals carry some financing options with their companies, offering interest-free or low-interest payments that can be spread out over a few months to multiple years. These plans allow homeowners to pay the costs incrementally instead of making a single large payment upfront.

Financing is company-specific, requiring a down payment or offering promotional interest rates that expire after so many months if the customer does not pay off their purchase. As with any terms and conditions, be sure to read them very closely, as some of these plans can have a high interest rate once the promotional period is over. Comparing options from multiple HVAC providers allows you to select the plan that provides a financing level and timing of payment choices more suited to your financial situation.

Also read: Ways to Save Money on a Tight Budget

Government and Utility Company Assistance Programs

Homeowners can also benefit from the many financial assistance programs the government provides to help them replace or upgrade their furnaces. 

The federal government has programs like LIHEAP (Low Income Home Energy Assistance Program), which provides grants to low-income households for heating costs and then furnace repairs or replacements. 

Likewise, many state and local governments offer subsidies or rebates for installing energy-efficient furnaces to reduce spending on environmental conservation and help household budgets.

Utility companies can also have programs to help with special rebates or energy-saving programs. Some electric companies offer payment plans and financing for buying new energy-efficient appliances. 

Call or visit your local utility company’s website for discounts, rebates, or zero-interest loans. These programs help offset the cost of a new furnace, thus serving as an immediate social need for homeowners.

Personal Loans: Pros and Cons

Personal loans can be helpful when financing a new furnace as they allow you to pay upfront while breaking up the cost into more manageable monthly payments. Unlike HVAC financing plans, personal loans enable borrowers to scout for competitive interest rates and terms from banks, credit unions, or online lenders. On the other hand, you will not have to pledge your home or assets as collateral when taking out a personal loan.

However, there are some cons to this as well. Your credit score determines personal loan interest rates, which can be more expensive than other ways to borrow. Lenders may also charge origination fees, adding to the overall cost of your loan. Before accepting a personal loan, it is important to compare offers and confirm that the monthly payments fit into your budget.

Using Credit Cards Wisely

One alternative payment for a furnace is using your credit card, which may be more handy in an urgent situation. For homeowners with a good credit card balance and somebody who comes in at a 0% introductory rate for checks you can only pay within the first two years, credit cards could be an option to finance over the short term without any extra cost. And even with reward points or cashback incentives, you can utilize a credit card in virtually every case (and get rewarded financially!)

But this is where the potential downsides enter. Credit card interest rates may be high, generally above 15% APR, and over time, this can add significantly to the final cost if not paid off quickly. Furthermore, pushing the limit on your credit card could hurt your score and cause you to fall into a financial hole. According to the services provided by your heating and air conditioning specialists, credit cards can finance a furnace; however, they should only be used temporarily, so you need not build high-interest debts.

Home Equity Loans and Lines of Credit

Regarding financing options, a home equity loan or line of credit (HELOC) is cheap. These low rates are because these loans use your home as collateral, which smoothens out default risks compared with personal loans or credit card APR. A home equity loan gives you a lump sum and fixed monthly payments, while a HELOC works like any other credit line — borrow only what you need up to the set limit.

The most significant disadvantage of financing with home equity is putting up your house as collateral. That means your home could be in danger if you do not make payments. Also, fees or closing costs may be required to establish a HELOC or home equity loan. But for borrowers with good credit and secure financial positions, these loans could be an economical way to pay off a new furnace at one time during the same time, potentially cutting down on interest rates.

Saving Up: Budgeting Tips for a New Furnace

If it is super cold outside and your furnace needs to be replaced anyway, and you can save up for a newer one, go for it. 

All you have to do is develop a cost-based target and earmark the amount monthly until you reach that goal. You can extend your savings faster by cutting discretionary expenses or delaying non-essential purchases.

A ‘home maintenance’ fund is also helpful for other unexpected household costs. Every month, direct deposit into this fund makes for useful padding for home repairs and replacements. It might take you some time to save up, but this can be a great debt-free way to pay for a new furnace without paying interest.

Seasonal Discounts and Promotions

Strategically timing your purchase can reduce the cost of a new furnace. Many HVAC companies and retailers advertise deals by season, especially in the spring and fall months when sales on heating/cooling systems slow down. While they do also have holiday sales, you can plan for these if you look months ahead.

A few manufacturers even offer rebate programs or extended warranties at different parts of the year. Taking advantage of these promotions can mean savings and even some benefits like part coverage or installation. You have to look up some deals that your company might be offering you for selling more. The time of calling will also affect the offer.

Energy Efficiency Rebates and Incentives

Consequently, most states and federal programs offer rebates to help defray the cost of converting your home heating system from a non-renewable source like gas or oil. As one example, the federal Energy Star program provides tax credits and rebates for eligible high-efficiency appliances. 

Some state and local governments could offer rebates for the cost of your furnace to partially pay for it, making up the difference with highly efficient model requirements.

As mentioned earlier, energy-efficient models tend to have an elevated price tag initially, but these incentives can drastically decrease the cost while reducing your electricity bill over time. 

Also read: How to Save Money on Electric Bills

How Beem Can Help You Manage Furnace Expenses

Beem provides budgeting and financing tools to assess your financial status, define reasonable goals, and determine how to finance them in one place. It also allows you to browse different payment methods for home loans or even possible discounts homeowners can use when dealing with major expenses related to maintaining and retaining a history piece.

In addition, its customized financial advice can assist users in selecting the most affordable possible form of financing according to their circumstances. Beem bundles all of these choices into an easy-to-use platform, making the financing application process for a new furnace simple.

Download the Beem app here.

Conclusion

A new furnace is inevitably a large expense. However, with some investigation of your financing options and assistance programs, you can figure out how to pay for it. Knowing your options, whether that be with a personal loan, credit card home equity loans, or government programs, is the only way to make an educated decision on how to finance it all. 

FAQs on How to Pay for a New Furnace