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📅 Last Updated: April 11, 2023
✏️ Written By Lisa Rennie
🕵️ Fact-Checked by Caitlin Wood

Whether you’re a homeowner, a business owner, or a landlord, having up-to-date and efficient furnace and AC units (or HVAC) in place is often a top priority, especially, in Canada where the winters are cold and the summers are hot. But what if you don’t have the money for it? Considering the sky-high cost of these items, it can be tough to scrounge up thousands of dollars. Luckily, you may have the opportunity to finance your furnace or AC. With furnace financing, you can get the funds you need to pay for the unit now, instead of having to spend months or even years saving for it.

Where To Find The Right Furnace and AC Financing In Canada?

There are multiple options when it comes to financing your furnace or AC. Depending on your financial needs, one option will yield better results than others. 

In-House Financing For Furnace And AC

Most furnace and AC (or HVAC) retailers offer in-house financing, much like car dealers offer in-house auto loans to help buyers make such a large purchase. Again, the price for furnaces and air conditioners is quite steep, so financing is often the only way for some consumers to make such purchases. 

How Does In-House Financing Work? 

Like most other types of loans, the financing agency will want to find out a few things about your financial health, such as your income, debt level, and credit score. You’ll need to get approved before you obtain furnace or AC financing, which typically entails filling out an application and waiting for the lender to either approve or deny it. If you are approved, you’ll need to make regular payments according to a specific schedule. 

Before you agree to go with this type of financing, you’ll want to get some details about the financial product, including the interest rate, terms, and any other fees that you may have to pay. 

Finance Your Furnace And AC With A HELOC or Home Equity Loan 

If you own a home and have some equity built up in it, then a HELOC (home equity line of credit) or home equity loan can help you access the funds needed to make this large purchase. With a home equity loan, you are essentially able to access a certain lump sum amount of money by leveraging your home’s equity, which can then be used to pay for your furnace or AC. 

How Does A HELOC Work? 

A HELOC, on the other hand, still involves the use of your home’s equity but, it functions more like a credit card rather than a traditional loan. With a HELOC, you’ll be approved for a specific credit limit that you can withdraw from. You are free to take out as much or as little as you like up to the credit limit and are only required to pay interest on the amount withdrawn rather than the entire credit limit.

Large Unsecured Personal Loan

Another way to finance your furnace or AC is to take out an unsecured personal loan to cover the cost of these appliances. Unsecured loans are simply loans that do not require any collateral to secure it. Meaning, there is no collateral that the lender can seize and sell to recoup payment in the event you default on your loan. These loans typically have higher interest rates than secured loans, but due to the lack of collateral, are less risky. 

How Does A Unsecured Personal Loan Work?

With this loan, you’ll be given a lump sum of money which you’ll have to repay in installments. Terms can vary between 3 months to 5 years, with longer terms easily stretching up to 10 years.  

What Do Furnace And AC Lenders Look For In An Applicant? 

In order to secure financing, you’ll need to be financially capable of making the loan payments every month. Your lender will want to verify your financial health. This is why they’ll check a number of things about your financial history. Here are a few things to consider when you apply for furnace or AC financing:

  • Personal Information – When you apply for furnace or AC financing, you’ll need to provide information regarding your identity. Typically, you’ll need to provide a government photo id to prove your identity and address. 
  • Income Information – Your lender will require proof of income, which can be provided through your paystubs or bank statements. Lenders require your income information to evaluate whether you can afford the loan payments (which include interest). 
  • Employment Information – Additionally, your lender will want to know how long you’ve been employed with your current employer. The longer you’ve been employed, the less risky you’ll seem to your lender. 
  • Debt-To-Income Ratio – Your debt level is a major factor lenders will consider when approving you for a loan. Lenders will check how much debt you have in comparison to your income. If a high portion of your income is eaten by your debt every month, the lender may reject you. Or they may approve you for a smaller loan amount. 
  • Credit Score Information – Many alternative lenders use more than your credit score to evaluate your creditworthiness. However, having a credit score of 650 or more will allow you to secure better rates and terms.

Learn more on how to apply for a loan in Canada.

Benefits Of Financing A Furnace Or AC Unit

Paying for a furnace or AC unit in full may be possible if you can afford it and your bank account is more than enough to cover the cost. But financing is often the only option. That said, there are some benefits to financing a brand new unit, including the following:

Spread Out The Cost

Instead of paying for a furnace or AC outright, you can spread the payments over a long period of time. All that money that you would have spent all at once to buy a unit could be used for other purposes, including investing. Plus, it’s easier to come up with a little bit of money every month than to have to come up with the entire price tag at once.

Improve Your Credit

If you’re responsible with your payments, you may be able to give your credit score a boost. Every payment you make will be reported to the credit bureaus, which will help improve your credit score over time. Depending on the financing option you choose, making on-time payments can help your overall credit.

Updating Your HVAC Can Increase The Value Of Your Home

Sometimes taking out a loan isn’t justified. Frivolous expenditures don’t warrant loans, but many times consumers borrow money for these purposes. But in other cases, financing can make financial sense, when it adds value to your home. Many things can boost your home’s value, including a new HVAC system. By purchasing and installing a new furnace or AC, you can effectively increase the value of your home, which makes it a smart investment.

You Can Afford A Better Model

You might have enough money to buy a basic furnace or AC model, but that may be as far as your finances go. On the other hand, financing will allow you to get yourself a better model, and one that is more energy-efficient. These tend to be more expensive, which is why financing might be needed if you choose to go this route. Besides, a higher-quality unit may be more robust and last longer.

Government Energy Savings Rebate
  • Energy Star Rebates. If you purchase an HVAC that is Energy Star certified you could qualify for a rebate of up to $1,000. 
  • Renoclimate Program – In Quebec, they offer citizens rebates if they purchase geothermal heating systems. 
  • Good Energy Rebates Program. In Yukon, you can get a rebate when you purchase certain appliances through the Good Energy Rebates Program. 
  • Efficiency PEI – Efficiency PEI offers a number of rebates through its energy efficiency programs. Energy Efficient Equipment Rebates, Home Insulation Rebates, and Solar Electric Rebate Programs are some of the included programs.

Furnace and AC Financing FAQs

How much will a new furnace cost?

Depending on the type of furnace you intend to buy – such as gas versus electric, or mid-grade versus high-efficiency – a furnace could cost you anywhere from $1,000 to $10,000, including equipment and labour. The average price, however, is approximately $4,500.

How much does central air conditioning cost?

Central air conditioning costs anywhere between $3,500 to $7,000. Again, the price will depend on the exact type of AC you buy, and whether or not there is extensive ductwork involved. That said, the average price runs around $5,500.  

I have bad credit, can I get approved for financing?

Conventional lenders will require decent credit before they approve a loan, Generally speaking, a credit score no less than 650 to 680 is required. If your credit score is lower than that, you may have to work with a bad credit lender to obtain financing for your furnace or AC. These lenders don’t focus as much on credit scores and instead look at things like your income and most recent payment history. That said, the interest rate associated with these bad credit loans are higher because of the higher risk that the lender assumes. 

Need Financing to Buy a Furnace or AC?

If you’re looking to finance the purchase of a furnace or AC, let Loans Canada help. We can help you go over your current finances and put you in touch with the right lender who can provide you with the exact financial product you need. Get in touch with Loans Canada today!


Caitlin Wood Priyanka Correia Lisa Rennie Bryan Daly Cris Ravazzano Margaret Johnson Kale Havervold Liz Enriquez Sean Cooper Veronica Ott Corrina Murdoch Chrissy Kapralos

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