Homeowners with weak borrowing credentials often attempt to finance without a credit check to enable monthly payment plans to replace residential HVAC equipment such as furnaces, water heaters, and air conditioning.
Given these systems’ high price tag, finding a finance company willing to approve your application might be challenging without viewing your consumer report or considering your FICO® or Vantage® score.
Therefore, you might want to explore the alternatives. Stay cool in the summer, warm in the winter, and enjoy hot water when bathing, washing dishes, and cleaning laundry.
Follow along as we break down six possible avenues (and two to avoid).
Furnace Financing Options
First, we explore several ways to finance furnaces without a credit check. Then, we apply the lessons learned from these examples to establish monthly payment plans for other residential HVAC replacement equipment.
Bad Credit
Homeowners with adverse histories on their consumer reports often think financing a replacement furnace without a credit check is the only way to pay monthly for this expensive residential HVAC equipment. This assumption is not valid on at least two levels.
- Subprime companies specialize in lending to consumers with bad credit. They might consider alternative data (rental history, cell phone payments, etc.) instead of or in addition to FICO® and Vantage® scores.
- Online lead aggregators capture unsecured personal loan requests from interested consumers and present their borrowing credentials to a vast network of subprime lenders. Sheer volume boosts your approval odds.
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Furnace Grants
The ideal way to finance a replacement furnace (or any HVAC equipment) without a credit check is to get the system free or at a meager cost. Your monthly payment will be most affordable when the government covers the charges.
The government pays for new furnaces when the upgrade saves enough gas or oil relative to the system and installation costs. Three programs combine to reduce total ownership costs for low-income households significantly.
- The Weatherization Assistance Program improves homes’ efficiency, lowering electric and gas costs.
- The Low Income Home Energy Assistance Program helps families pay utility bills.
- The Energy Star program offers rebates to purchase efficient HVAC equipment.
Water Heater Financing
Second, we explore ways to finance water heaters without a credit check. Apply the lessons from this section to arrange monthly payment plans for other residential HVAC replacement equipment.
Water Heater Grants
Why finance a water heater when the government might give you one or significantly reduce its cost? Benefits do not require a credit check, and you do not have to repay the money.
Before borrowing money, see if you qualify for free water heater replacement. A slight installation delay might be a worthy tradeoff if your unit is not leaking. Energy audits take time.
Companies with Financing
Looking for HVAC companies with in-house financing is a lousy way to establish monthly payment plans without a credit check. Would you go to your local bank branch and ask them if they offer replacement water heaters in-house?
Of course, that would be silly. The bank would refer you to a local contractor specializing in selling and installing water heaters while offering to help you with your money issues.
Likewise, HVAC companies that offer “in-house financing” refer customers to bankers handling underwriting, funding, billing, and collections functions. Waiting until the last second does not guarantee a more lenient lender.
Requesting a personal loan before contacting a contractor can help you avoid last-minute snafus. If approved, you can choose the provider with the best price, service, and reputation instead of one that offers “in-house financing.”
Separate the transactions.
Rent-to-Own
Rent-to-own arrangements are a popular way to replace a water heater without a credit check and make monthly payments later. These HVAC financing plans appeal to homeowners who traditional lenders have turned away because of adverse history on their consumer reports.
Many rent-to-own companies will not consider your credit score and other traditional underwriting tools. However, they may still look at reports from alternate bureaus to verify that you meet their base criteria.
- Own the home where the installation will occur
- Current on the mortgage payment
- Employed for at least six months
- Household income above $2,750 per month
- Have an open checking account with a positive balance
- No Non-Sufficient Funds (NSF) in the last ninety days
Homeowners should know the potential downsides to using rent-to-own contracts before signing on the dotted line. Read the agreement carefully, looking out for any of these potential pitfalls.
- Balloon payments at the end of lease terms to transfer ownership
- Total installments exceed the retail price by 100% or more
- Requirements to purchase insurance or extended warranties
- Possible repossession without compensation for money received
Air Conditioner Financing
Finally, we explore ways to finance air conditioning without a credit check. Apply the concepts covered in this section to establish monthly payment plans for other residential HVAC replacement equipment.
A/C Grants
The ideal way to finance an air conditioning system is to get the system free or at a meager cost. Government benefits do not require a credit check, and you do not incur interest or have to repay the agency.
Before borrowing money, see if you qualify for government air conditioning assistance. New units save energy and improve health outcomes for people with breathing difficulties.
Medically Necessary
Believe it or not, a Flexible Spending Account (FSA) could be a viable way to pay for an air conditioner without a credit check. However, only people with significant health conditions will qualify.
You can use this FSA trick to fund specific home repairs addressing health and safety issues.
Home improvements accompanied by a letter of medical necessity are FSA-eligible expenses, provided they do not increase the property value. For example, severe asthma, allergies, or other respiratory illnesses might require special HVAC equipment.
- Air conditioner
- HEPA filters
- Air purifiers
Employees can access the total amount in their FSA at the start of the year, even without prior contributions. Over the year, they repay the advanced amount through pre-tax deductions from their paycheck.
- Elect to make FSA contributions during the annual open enrollment.
- Install the air conditioner at the beginning of the FSA plan year.
- Your employer must reimburse qualifying expenses immediately.
- You can repay the interest-free advance using pretax dollars in up to 12 months, which can save you money in three ways.
- Federal income taxes
- State income taxes (where applicable)
- FICA taxes
Per IRS rules, employers cannot pull your consumer report or consider your credit score. They must accept all participants regardless of any adverse payment information appearing on their file.
Portable Units
Finally, monthly payment plans for a single portable air conditioner are most realistic without a credit check because the amount financed is much smaller than that for central air installations and multiple window units.
Portable air conditioners allow the user to move the unit from room to room to cool off the living space in use at the time, unlike systems that lower temperatures throughout the house or multiple living spaces.
Personal loan approvals go to consumers whose monthly payments are 80% lower than their earnings. Portable A/C units make this happen in two ways.
- Lower price compared to central air
- Fewer units compared to window A/C
