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While water heater contracts can be a helpful way to make a large appliance affordable, there are times when you may wish to exit the arrangement early. It could be due to finding a better deal elsewhere or simply wanting a new service provider. Perhaps you are moving, downsizing, or looking into a gas instead of an electric heater. In any case, it helps to know how to exit the contract. Since it’s profitable for the rental company to keep you engaged in the agreement, it is important to take responsible steps to get out of the arrangement. By gathering all the necessary information about your options, you can prudently move forward while avoiding potential pitfalls. 

Should You Buy Or Rent A Water Heater?

Many homeowners like the idea of having much smaller installment payments rather than pay out a huge lump sum in one shot. Coming up with a few hundred or thousand dollars can be tough for some, which is why rental agreements are available. There are so many expenses related to operating a home, so it’s in your best interests to be as cost-effective as possible. 

And while it may be more affordable over the short term to rent, you’ll likely wind up spending more money over the long run. This is especially true if you plan to stick around in your home for the long haul. 

Plus, your rent payments will never end, and you won’t end up owning anything after a certain number of payments have been made. Compare that setup with owning a water heater, which will be your property that you own outright, whether you pay in full or opt for an installment payment plan. 

Keep in mind, however, that as the owner of a water heater, you will be responsible for maintaining the equipment and making any necessary repairs as required. These costs can add up if you’re not careful. That said, water heaters typically come with warranties that cover parts and labour, which is the same as what you’d get with a rental contract. 

Preparing Yourself To Cancel Your Water Heater Rental Contract

If you’ve decided that you want out of your water heater rental contract, there are a few steps you can take to make sure you are prepared.

Have Your Water Heater Information Handy

Take a photo of your water heater information plate so you have it on hand when you call your rental provider to cancel.

Get A Copy Of Your Rental Contract

Go through the terms and conditions in the contract carefully to see what your termination rights are. 

Speak With A Supervisor About Your Plans To Cancel

If you talk to a customer service representative at the water heater rental company, you might not get too far when it comes to asking to have any cancellation fee waived. Instead, ask to speak with management and explain your situation. 

You’d be well-advised to go into this conversation armed with valid reasons for wanting to back out early, such as faulty equipment, poor customer service, or hidden fees that were not transparent to you when you first took out the contract.

Ways To Get Out of a Water Heater Rental Contract

There are a few exit strategies for your rental water heater contract. By identifying the pros and cons of each, you can make a fully informed decision.

Paying Cancellation Fees

Any rental agreement that is arranged for a set period of time includes a clause for early cancellation. The fee can either be based on the time remaining in your contract or a set amount. Consult your paperwork to get a thorough understanding of your rights and responsibilities. This can avoid any unnecessary or illegal fees being applied to your account. This method entails you contacting the company and paying any penalties, then returning your water heater. 

Some rental companies charge cancellation fees that are not stipulated in contracts and are illegal. In this case, you have no obligation to pay them. 

Part IV of the Consumer Protection Act protects you if your contract doesn’t state a rental or fixed-term rate or what the total payments will be over the term and if the contract was never signed or acknowledged by you. If they arbitrarily charge you a cancellation fee that is not included in the contract, you should not be on the hook to pay it.

Buying Out the Heater

Another way to leave your contract is to pay to purchase the heater itself. Generally, rental contracts include a buyout clause that lets you pay the noted price as per the supplier’s set fee. You can usually find this information online, at the official website of the supplier. Conversely, you can contact them directly to get the exact amount. This method finishes with you owning the water heater free and clear. 

Calling a Service Provider

Whether it is through the rental company or a third party, there are resources to assist you in managing your rental agreement. By sourcing assistance from a professional who works on your behalf, you can truly understand all of your options. This can help you avoid issues with things like pick-up fees and other contractual nuances which can have serious financial ramifications.

 To learn how to cancel your internet contract, check out this article.  

What Fees Can Be Charged For Cancelling A Water Heater Rental Contract?

There are some standard fees associated with boilerplate rental contracts. These include early cancellations or charges associated with defaulted payments. Other standard fees relate to unexpected damage to the water heater (dents, scratches, plumbing issues, etc.). These don’t count as wear and tear. Additionally, you are eligible for a cost to return the tank (if the provider is doing the leg work). You are also on the hook for payments owing and administrative costs to close the account. However, there are situations where you may not actually be liable for the payments. Sometimes, selective wording in the contract can act as an exit strategy when applied correctly. 

Beware of Illegal Fees

Among the fees which you are under no obligation to pay are those applied illegally. Contract law is binding, assuming the contract was properly executed. Bear in mind that to have a contract be legally enforceable, five criteria must be met. These include consideration (the exchange of funds), the ability to enter into the agreement (competency), and being the legal age of consent (without coercion or duress). Other factors necessary to make a contract viable are a witness, date, and signatures. 

Provided all of these necessary criteria are in place, you have a viable contract. Nonetheless, there are still situations where fees can be applied illegally. Identifying these scenarios is essential to making certain that you don’t overpay. Ensure that all of your payments are current and that there is no damage to the water heater, except for standard wear and tear. Additionally, ensure that those working on the project are able to return the rented heater in optimal condition. 

So long as you are able to complete all of the above, there are consumer protection regulations in place to keep you secure financially. Differing according to your province, standard rules set in place ensure that you can avoid any penalties or buyout charges when returning your rental. 

While these rules are in place, there are still companies that will try to apply unnecessary charges. Prudent steps to avoid these include reviewing your contract for the following: 

Rental Rates

Sometimes, contracts don’t actually stipulate an amount for rental charges. Without this, the consideration factor of contracts isn’t present. It means that the agreement doesn’t meet the necessary criteria and is subject to voiding. This leaves the contract open-ended and enables you to exit smoothly. 

Term of Agreement

Often, something that is overlooked is the actual term of the contract itself. If your contract doesn’t note a set term for your arrangement, it is open-ended. This leaves the agreement open to interpretation, at best. At worst, it could leave you subject to payments in perpetuity under the guise of industry-standard operations. 

Total Amount Owing

Another aspect of consideration is the total amount owing. If you notice that there are variable rates (those that change yearly or over a different term) you are not dealing with an enforceable agreement. The contract must clearly state what total payments are expected over the course of the agreement’s set term. Without this, it is easy to nullify the agreement itself. 


Did you actually sign the agreement? Was it witnessed? These are essential to ensuring the enforceability of contracts. Without this signature, you are not officially a party to the agreement. 

By understanding the above, you can use the nuances of contract law to your advantage. This can help you efficiently get out of your water heater rental agreement. 

Considering deferring your bill payments? This is what you need to know.

How To Protect Yourself In Future Rental Contracts 

In order to avoid pitfalls related to your upcoming rental agreement, there are some simple measures you can take. These include:

  • Check the Rates: Ensure that the contract clearly sets forth the payment rates, both upfront and down the road. This prevents any surprises and gives you a full picture of what your monthly expenses will look like.   
  • Terms and Conditions: Familiarize yourself with the rights and responsibilities granted to you through the agreement. Consider aspects like who is in charge of maintenance and what happens in the event of breakage or damage (both if it is or isn’t your fault). Check default payment clauses, the length of the agreement, and all other aspects of the document. 
  • Cancellations and Buyout Fees: Learn, ahead of time, what is entailed should you need to leave the contract. Find out what charges you will face should you need to exit prior to the set term and return the heater. Ensure that you are fully aware of any and all fees associate with buying out the water heater. This way, should you want to make a change down the road, you are fully informed. 
  • Financial Disclosure: Since a rental agreement is essentially a form of credit, the lender is likely to want financial information from you. Learn whether this entails a credit check, bank records, proof of employment, or other documentation. This way, you can be fully prepared and avoid any undesirable surprises. 

Need to cancel your auto insurance?

Final Thoughts

When you want to get out of your rental water heater agreement, there are several options available. The best way to ensure that you avoid upfront costs and penalty fees is to familiarize yourself with the contract ahead of time. So long as you make your regular payments and take your time assessing the financial ramifications of each exit strategy, you can make a smooth transition to a new heater. 

Corrina Murdoch avatar on Loans Canada
Corrina Murdoch

Corrina Murdoch has been a dedicated freelance writer and editor for several years. With an academic background in the sciences and a penchant for mathematics, she seeks to provide readers with accurate, reliable information on important topics. Working as a print journalist for several years, Corrina expanded her reach into the digital sphere to help more people gain insight into the realm of finances. When she's not writing, you can find Corrina swimming and spending time with family.

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