Many HVAC companies offer financing to their customers to streamline the HVAC replacement process and paying for it. Banks and credit unions may approve you for a personal loan, home equity line of credit, or a home improvement loan where loan proceeds are used specifically to make the upgrades your home demands.
Personal Loans and Home Improvement Loans from Your Bank
Some financial institutions offer home improvement loans specifically for purchasing new HVAC systems. These loans typically have lower interest rates and longer repayment terms than personal loans.
The $5,000 rule is an industry-accepted rule for determining whether to repair or replace an HVAC system. Multiply the age of your equipment by its estimated repair cost. If the outcome is under $5,000, you should probably repair it. If over $5,000, you should replace it.
There are 4 main options for AC financing or HVAC system financing: a personal loan, a home equity loan, a HELOC, and HVAC financing through your local Trane dealer. For all of these options, you can reduce the amount of the loan or the credit card balance if you can make a down payment.
Replacing a HVAC system can involve one or both, and it makes a difference, price-wise. According to HomeGuide.com, the average cost to replace the HVAC units is $5,000 to $11,000; to replace the units with ductwork runs between $7,000 and $16,000 in total.
Better pricing: Since there's less demand for HVAC system replacement in spring and fall, your HVAC contractor might even offer their own savings incentives.
Homeowners insurance covers HVAC systems when the damage is a result of a covered disaster or peril, including high winds, fallen trees, theft, hail or even a fire. So if lightning strikes your unit and damages its electrical components, your homeowners insurance policy would probably cover it.
Homeowners can explore several funding solutions to cover an HVAC system. Popular funding solutions include personal loans, home equity loans, HELOCs, and credit cards. The right fit varies based on home equity, preferences, and financial situation.
The global rise in fuel and energy prices has also increased the cost of manufacturing and transporting HVAC equipment, thus driving up HVAC prices for consumers. Changing environmental regulations also push the market towards newer, more expensive products as manufacturers work to comply with evolving standards.
A homeowners policy may cover your HVAC in two ways: either through the dwelling coverage or the personal property coverage on your policy. Dwelling coverage may help pay to repair or replace a built-in unit since it's considered part of the home's structure.
Usually, it is a quick fix, but sometimes the failure can be caused by a much bigger problem. The most expensive part of an AC unit to replace and repair is the air compressor.
Federal Tax Credits
The Inflation Reduction Act (IRA) of 2022 makes tax credits available on high-efficiency HVAC units through 2032. It allows you to deduct 30 percent of the purchase and installation costs and caps the amount you can write off: Air conditioners, furnaces, boilers, and water heaters max out at $600.
0 to 9 years old: Your HVAC equipment most likely has years of life left. Seriously consider a repair over a replacement. 10 to 13 years old: Some high-use heating and air conditioning systems wear out after about a decade.
If your income is limited and you're looking for an air conditioner, the U.S. Department of Energy's Weatherization Assistance Program (WAP) might be able to assist. The largest program of its kind in the country, WAP helps limited-income households improve their energy efficiency and reduce their energy costs.
Many HVAC companies offer payment plans to make system upgrades more affordable. These plans typically allow you to spread the cost of your new system over several months or years, depending on the terms.
Depending on normal weather patterns, the best time to buy an air conditioner is in the Spring (March and April) and the best time to install a new furnace is in the fall (September and October).
While negotiating HVAC quotes is possible, it's important to focus on value rather than just the lowest price. A reputable contractor who offers quality service and reliable equipment will be worth the investment in the long run.
The cost of replacing an HVAC system typically ranges from $6,224 to $11,434. This HVAC replacement cost depends on your home's size, the system type, and installation requirements. The estimate includes both a central air conditioning unit and a gas furnace, along with standard labor costs.
Tax Cuts and Jobs Act (TCJA), P.L. 115-97 allows HVAC repair and replacement costs to be included as tax deductions during the year they were incurred. This is unlike the previous policy, where a business had to include a fraction of the cost annually over the entire HVAC depreciation life – a whopping 39 years.
Loans feature repayment terms of 24 to 84 months. For example, if you receive a $10,000 loan with a 36-month term and a 17.59% APR (which includes a 13.94% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $341.48.
Simply put, no, you cannot replace your AC unit yourself.
Even if you have the technical know-how to install an AC unit, all of the electrical components add an elevated level of risk to the process. Plus, it takes nuanced HVAC experience to ensure you get the right unit for the size of your house.
More than likely, your policy doesn't cover flooding or earthquakes. That makes sense since not all areas of the country are prone to earthquakes or flooding. If you need coverage, you'll need to purchase a policy for whichever you need. Earthquake insurance and flooding insurance are two different policies.