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How To Compare Financing Offers – HVAC

Are you looking for a way to financing your upcoming air conditioning project? Whether you have an emergency repair or simply want to increase your home’s energy efficiency, there are a variety of ways financing can help you get the project finished. At Modernize, we frequently speak to homeowners about their home improvement projects. In recent interviews, 40 percent of homeowners plan to finance up 50 percent of their HVAC project. With so many financing options, it’s important to compare each financing method to determine what’s best for you. 

Here’s what to look for as you review all of your financing alternatives. 

Table of Contents

Comparing Air Conditioning Financing Options

Since there are many different ways to finance your air conditioning renovations, make sure you take the time to compare each one would mean to your monthly budget and yearly financial goals. 

1. Term

When you hear the word term associated with financing it refers to how long your loan will last for. A longer-term means you’ll pay more interest over the course of the loan, but you’ll likely have smaller monthly payments. If you want to repay the loan as quickly as possible you’ll want a shorter term and higher monthly payments. 

Remember, credit cards, while a version of financing, don’t have a set term because they’re a different kind of debt known as revolving debt. People sometimes get confused because you could be making the minimum monthly payments on your credit card but never get out of debt, whereas if you make the payments on your loan each month, you’ll have repaid it at the end of the term. 

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2. Interest rate

Interest rates are paramount when it comes to comparing financing offers. Keep in mind, loans require that you pay back the borrowed amount as well as interest that accrues over time. Your interest rate will determine how much you’ll pay based on the original amount borrowed. Factors that influence your interest rate will include your credit score, bank, and financial profile. Borrowers with stable sources of income and good credit scores typically get lower interest rates. 

You’ll likely have a different interest rate based on your chosen loan method. For example, small personal loans through a national bank usually have a different interest rate than those from credit unions. You can usually get lenders to do a soft credit check, which shouldn’t impact your credit, to quote you rates. Then, you can compare interest rates before deciding which lender you’ll go with.

3. Fees

There are usually numbers hidden in the fine print of financing offers, including different kinds of fees. Some can be avoided by adhering to the terms of the agreement, and some are required regardless. 

Here are a few you might encounter when financing your home renovation project.

Origination fee: This is a required fee for taking out a loan, usually paid at the beginning of the transaction. Origination fees are almost always a one-time payment set by the lending institution. Not all lenders have origination fees, so make sure you ask your lender if this is something they charge.

Late payment fee: As the name suggests, late payment fees are issued when a monthly or annual payment on your loan is late. Some lenders will have a grace period if you’re having a tight month, while other lenders allow you to change your monthly payment date. 

Early repayment fee: If you pay off your loan before the end of the term, there could be a fee for doing so. When applying for a loan, make sure you understand the length of your repayment period and ask whether you’ll be charged for paying off the loan before that time. 

Fees can add up, so check with the source of your loan to get all of the information before moving forward with a loan. 

4. Type of debt

Though “debt” is often used as a blanket term for owing money, the specific type of debt makes a difference in the long run. If you decide to go into debt in order to finance your home improvement project, carefully consider the type of debt and what it will mean for your financial freedom. 

Revolving debt: This is usually offered by credit card companies as a quick and easy way to get money. The debtor is issued a credit card with a set limit based on their financial profile and can borrow more as they repay. 


  • More flexible than a standard loan
  • No end-date as long as you don’t hit your credit limit
  • You can get access to funds as soon as you receive your card


  • Monthly fees are subject to change
  • Late payments can result in hefty fees
  • Negatively impacts credit score if you miss payments
  • Can be hard to repay if you’re not diligent

Installment debt: This is a loan that is repaid in monthly installments, including interest. Interest rates are determined by factors including the amount issued, total number of payments and the duration of the repayment period


  • Can enable large purchases
  • Equal monthly payments that remain the same for the life of the loan
  • More structured than revolving debt so you know when you’ll be out of debt


  • Failure to meet monthly payments incurs fees and can impact your credit score
  • You might not qualify for advertised interest rates

Though it’s best to avoid debt when possible, spending within your means and maintaining a strict repayment schedule are good ways to make the most of borrowed money. 

5. Monthly payments

One of the most important aspects you’ll need to compare when you’re looking at what financing offers are available to you is what your actual monthly payments will be. You’ll need financing that offers monthly payments you can afford. 

  • Experiment with looking at longer terms and lower monthly payments to find a monthly payment that fits into your current budget. 
  • Remember that while credit cards might have low minimum payments each month, that doesn’t necessarily mean you’ll be paying the principle, probably just the interest. 

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6. Extra benefits 

There are some extra benefits offered by some lenders that could make the difference if you’re having a hard time choosing who to go with. Some of these could be:

  • Interest rate discount, which is sometimes offered for being a member at a local credit union or bank 
  • Discount for signing up for auto-pay 
  • Some credit cards offer significant cash back or travel rewards, which could make them an attractive option if you’re paying for a smaller project 

How Should You Finance Your Air Conditioning Project?

Between personal loans, government grants, strict budgeting and even taking out a second mortgage, there are numerous options for financing an HVAC project. Different financing offers feature different terms, interest rates, fees and repayment periods. Weighing the pros and cons of each method will allow you to make an informed decision that’s best for your wallet.

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