At IHCS Finance, we understand that financing HVAC services can be a challenge, especially when customers have credit concerns. Heating and cooling systems are essential, yet their high costs make it difficult for many to pay upfront. As a result, HVAC companies are increasingly seeking ways to offer flexible financing options that not only serve their customers but also help grow their businesses.
Thomas Murphy, our managing member at IHCS Finance, has a wealth of experience in this area. With a background in retail finance, home improvement, and rent-to-own services, Thomas has a deep understanding of the complexities HVAC businesses face. As a director of finance at Air Around the Clock, he has focused on developing solutions that cater to customers across various credit levels, helping them secure financing for essential home improvements.
In this article, we’ll explore different financing options for HVAC services, particularly for customers with credit challenges. We’ll also cover how concierge finance programs and lease-to-own models can help HVAC companies offer more flexible payment plans. Additionally, we’ll show how these solutions can enhance the customer experience and promote business growth.
Securing financing for customers with lower credit scores can be a frustrating process. Many consumers struggle to get approved, even for necessary services like HVAC. This creates challenges for both the customer and the service provider.
Some companies, including those that work in retail and rent-to-own industries, have found success in financing for credit-challenged customers. These businesses have developed systems that allow customers with low credit scores to make essential purchases, often by partnering with retailers and leasing products back to the customer.
HVAC companies are now adopting similar models, partnering with specialized finance firms to help customers with less-than-perfect credit get the services they need. Here are some of the key financing options available:
The IDAP is another effective method, allowing technicians to input customer information on a tablet and receive an immediate financing decision. This speeds up the process and ensures that customers are offered suitable financing options quickly.
Lease-to-own financing is becoming a popular option, particularly for customers with credit challenges. This model enables customers to access necessary services, like heating or cooling, without needing high credit scores. Here’s a comparison:
Rent-to-Own: Customers make monthly payments for HVAC services without owning the equipment. It’s similar to a subscription model, where the provider handles maintenance, repairs, and replacements.
Lease-to-Own: This option allows customers with poor credit to lease the equipment from a third party, paying over time to eventually own it. Payments typically total double the equipment’s value over a set period.
In lease-to-own agreements, the equipment technically belongs to the leasing company. If a customer defaults, the company can reclaim the equipment, though this is usually a last resort. These companies specialize in managing high-risk clients, offering extended terms and other payment arrangements to make monthly payments affordable.
Lease-to-own finance companies typically charge success-based fees between 2.5% and 2.9% of the financed amount. Service providers only pay this fee if the financing is successful, making this an attractive option for businesses that want to expand their financing offerings without significant upfront costs.
Finance companies, like IHCS, also work to educate service providers about the nuances of financing models. Understanding these options can help businesses structure their offerings effectively, avoiding financial pitfalls and ensuring customer satisfaction.
Credit card fees are another concern for HVAC providers. Many customers prefer using credit cards for the convenience and rewards, but this can reduce profit margins for the provider. Transparent communication about potential extra fees is crucial to maintain trust.
Customers with credit challenges may feel embarrassed about their situation, which can make financing conversations uncomfortable. By having a finance expert handle these discussions, HVAC companies can offer customers a more private and supportive experience.
Pre-qualifying customers before the technician arrives at their home can streamline the sales process. Using soft credit pulls to grade customers helps HVAC providers tailor their approach, offering financing options suited to each customer’s situation.
At IHCS Finance, we continue to expand our financing options to include other home services such as roofing, water heaters, and generators. This broader approach allows us to support contractors and service providers across a wide range of industries, ensuring they can offer their customers flexible and accessible financing options.
Financing HVAC services doesn’t need to be complicated, even for customers with low credit scores. By partnering with specialized finance companies like IHCS or using models like lease-to-own, HVAC providers can ensure their customers receive the essential services they need, while also maintaining healthy business growth.
Offering diverse financing solutions helps providers increase sales, improve customer satisfaction, and stay competitive in the ever-evolving home services market.
Interest rates for HVAC financing vary depending on the lender and your credit score. Rates can range from 5% to 25%.
Yes, many lenders offer options for those with poor credit, but the interest rates and terms may be less favorable.
Yes, many companies offer financing for both HVAC repairs and full system installations.
Financing terms typically range from 12 to 96 months, depending on the lender and the amount financed.
Some lenders offer promotional 0% interest financing for a set period, usually up to 12 or 18 months, depending on your credit score.
You can finance various systems, including air conditioners, furnaces, heat pumps, and ductless systems.
Sponsors and Affiliates:
Sponsored by:
Affiliate Links:
For more information on HVAC financing, feel free to reach out to IHCS Finance or tune into our podcast, where we explore more financing solutions and business strategies for the home services industry!