New Furnace Financing

Can you finance a new furnace?

Happily, the answer to this question is a resounding yes. There are many lenders prepared to offer finance for this expensive but vital piece of home equipment. So, if you don’t want to stretch your resources to the breaking point, or simply can’t find the cash, keep reading to find out your options for financing a furnace.

Best Furnace Personal Loans

Among the lenders you should look at for a personal loan for furnace financing are the following:

Axos offers loans of up to $35,000 to those with good to excellent credit.

AXOS Bank

✔ Funding: Borrow $5,000 - $50,000
✔ Minimum Credit Score: 700
✔ APR: 7.15 - 17.99%
✔ Loan term: 3 - 6 years
✔ Funding turnaround: within 1-3 business days

AXOS Bank offers loans up to $50k and great refinancing options on existing loans. Best for borrowers with higher credit scores..

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Discover will lend a maximum of $35,000 and promise funding in a single business day after acceptance.

Discover

✔ Funding: Borrow $2,500 - $35,000
✔ Minimum Credit Score: 660
✔ APR: 5.99% - 24.99%
✔ Loan term: 3 - 7 years
✔ Funding turnaround: within 24 hours

With Discover personal loans, borrowers can apply up to $35K in funding as fast as next business day. Best for those who want to consolidate debt and have a good credit score.

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LendingPoint’s loans start at just $2,000 and are generous with their credit requirements.

LendingPoint

✔ Funding: Borrow $2,000 - $36,500
✔ Minimum Credit Score: 580
✔ APR: 9.99-35.99%
✔ Loan term: 2 - 4 years
✔ Funding turnaround: as fast as within 24 hours

With LendingPoint, borrowers with fair credit can obtain a loan between $2,000 - $36,500 and get funded within 24 hours. Origination fees may apply.

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OneMain Financial also caters to those with less than perfect credit.

OneMain Financial

✔ Funding: Borrow $2,000 - $36,500
✔ Minimum Credit Score: no minimum requirement
✔ APR: 18.00 - 35.99%
✔ Loan term: 2 - 5 years
✔ Funding turnaround: 24 - 48 hours

With OneMain Financial, borrowers can obtain a personal loan of up to $20K without a minimum required credit score. Origination fees do apply and the lender offers bonus financial education tools and calculators.

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Universal Credit can provide loans of up to $50,000 and has options even for those with poor credit.

How much does a new furnace cost?

The cost of a furnace depends on its capacity and sophistication. You might expect to pay between $1,500 and $2,500 for a mid-efficiency unit – that’s a furnace that has an 80% to 89% annual fuel efficiency (AFUE) rating. A more efficient furnace, with an AFUE rating of greater than 90%, will cost more – somewhere in the $3,000 to $5,000 range.

Higher efficiency means that less of the fuel consumed is wasted. However, though this saves on your energy bills, not only do high-efficiency furnaces cost more to buy, they are often more expensive to repair when they go wrong. Ideally, go for a new furnace that has an AFUE rating above 90% but not more than 95%, that’s when repairs get seriously more costly.

On top of the cost of the furnace itself, you need to add in installation costs, generally in the $1,000 ballpark, plus changing the filter regularly and an annual service. Filters are pretty cheap – around $5 to $30, and a service is around $120.

Generally, you need somewhere between $3,500 and $6,000 to replace your old furnace.

How do you finance a new furnace?

Personal Loan

Most people will find a personal loan is the most affordable way to finance a new furnace. Rates are generally low, between 11-24% for those with reasonable credit and lower for those with excellent credit. Using a personal loan means you won’t have any nasty surprises down the line and you know you’ll pay it off in the defined time frame. It’s also tied to you, rather than your home as some of the other options we’ll cover shortly.

In-House

Furnace installation companies often offer finance in partnership with an approved lender. This can make the whole process straightforward but you need to check that you can’t get cheaper finance elsewhere. Make sure you read the fine print before signing.

Credit Cards

Getting a credit card to fund a new furnace might be an option so long as the amount required is not too great and you can qualify for a low-interest credit card or one with a long 0% APR period. Make sure you budget carefully so that you pay off the loan before that period runs out. Any outstanding amount will be hit with a normal credit card APR and that’s not the cheapest form of finance, though a balance transfer may be an option.

HELOC

Approaching a lender that offers a home equity line of credit (HELOC) may be an attractive choice for finance. Operating much like a credit card, a HELOC often offers high credit limits, low-interest rates, and long repayment periods. The only downside is that a HELOC is much like a second mortgage and should you default, the lender has the right to seize your home.

Home Equity Loan

A home equity loan is a second mortgage, and as such, usually has a low interest rate and long term, typically 5 - 15 years. It is often a cheaper option than a HELOC but has the same possible problem that your home is collateral for the loan.

401(k) Loan

Another option worth mentioning here is a 401(k) loan. Some retirement plan providers allow you to take out a loan from your future retirement savings. Provided you’ve saved at least double the cost of your new furnace for retirement, you should be able to borrow from yourself. This requires no credit check or interest, but you need to fully understand how it will set your retirement plans back. That said, a new furnace for your home is a good reason to borrow from your future.

Rent-to-Buy

Some furnace companies offer essentially furnace leasing so you pay a monthly fee and then a lump sum at the end of the term. This usually requires no credit check. The terms and costs around this vary significantly, so if a company near you offers this do your research thoroughly to ensure it’s the right option for you.

Government Programs

The government has schemes that help those on low incomes, with special needs, and to help improve the environment. Start by checking out the Low Income Home Energy Assistance Program (LIHEAP), the Energy Star Program, and the Weatherization Assistance Program.