Air Conditioner Financing: Navigating Costs and Options for Your AC Replacement

Replacing your home’s air conditioning unit not only enhances its functionality but also improves your carbon footprint, making it a worthwhile investment for both efficiency and environmental impact. After selecting an air conditioning contractor through careful comparison of estimates, the next crucial step is to consider air conditioner financing options. With project costs ranging from $6,000 to $12,000 for a 1,000 square-foot home, understanding the financial aspect is key.

Downlow on the Down Payment

HVAC jobs vary from a full-on replacement to a repair. Often time an air conditioning contractor will need to conduct ductwork or modifications to a home prior to installing a new unit. In those cases, there might be a request for a down payment. Homeowners typically pay about 20% of the final quote.

While there are many options for air conditioner financing, in some cases, contractors will offer discounts for paying in cash, but be wary — if a contractor requests a large cash sum upfront, it could be a scam and risks the homeowner being left unprotected.

Air Conditioner Financing: Dollars and Cents

The best way to secure the lowest price for your air conditioning project is to compare multiple contractor quotes. That’s why Modernize encourages homeowners to get multiple estimates before making a final decision.

When it comes to air conditioning financing, contractors might have a preferred manufacturer that they work with to provide you with a payment plan. Just remember to be mindful of interest rates. 

If you want to pay through a payment plan, your contractor might offer their own so you don’t have to go through a bank. And if you do need to go through a bank, be sure you first learn about all of the financial incentives available to you both directly and indirectly in the form of loans or tax credits.

For instance, if you install a new air conditioning unit as part of an energy efficiency upgrade, at least part of the cost may be deductible.

Understand Equity Options for Financing Your Air Conditioner

Homeowners can often use their homes, whether mortgaged or not, as securities for loans to fund home improvement projects.

Two common ways to leverage your home for credit from a bank or other financial institutions include lines of credit and loans. If either of these are applicable in your situation, run it by your air conditioning contractor. An experienced installer will have both expert and valuable anecdotal advice regarding these methods.

Home Equity Line of Credit (HELOC)

A home equity line of credit, otherwise known as a HELOC, allows homeowners to borrow money against their home’s equity. HELOCs are generally flexible but limited by a home’s value, and they also carry the risk of foreclosure.

Home Equity Loan

If a HELOC doesn’t seem like the right fit, the other option is a home equity loan – which lets a homeowner borrow money against the value of a home over the amount of any or all mortgages levied against the property. It’s sort of like a second mortgage, positioning the home itself as the security for the loan.

Air Conditioning Size Calculator

Ready to find out how big your AC unit should be so you can start researching and budgeting your options? Click here!

Take Me There

Whatever options you find suits you best, it’s a safe bet to talk it over with your contractor. Their experience with other homeowners in the area and specifically as it pertains to air conditioning installation projects will be valuable when it comes to determining the best path forward for your own financing.