HVAC Financing for Contractors: Launch In-House Plans with No Bank or Hassle

Imagine seeing a $10,000 bill for the residential HVAC upgrades needed. Regardless of how badly your clients need it, they may simply have no spare money to finance the purchase and pay 100% of the HVAC system cost upfront. That’s why the economics of the HVAC business is self-explanatory today – 70% of sales go to businesses ready to offer flexible financing.

Even the statistics of the U.S. Department of Energy and ACHR News prove that 60% of households postpone HVAC purchases and renovations because of the high cost, with the price tag ranging from $5,000 to $15,000. The price seems unaffordable for an average household, leading to a sharp increase in energy bills and the loss of indoor comfort that a more modern and efficient HVAC system would guarantee.

Thus, it’s evident that HVAC companies offering flexible in-house consumer financing win a unique competitive advantage in the market. Are you also interested in getting this secret weapon for HVAC customer acquisition and sales boost? Here is a guide to the nuances of HVAC financing and automation of in-house financing solutions.

How Financing Wins More HVAC Clients

By offering in-house financing, you’re sure to increase HVAC conversions, as this method of payment makes the whole purchase much more affordable. Here’s how it works:

• Suppose the system costs $10,000 in total.
• With a 24-month payment plan, your clients will need to pay only around $416 per month.
• This way, the purchase becomes affordable even for a household without a substantial sum in savings.

By making monthly payments realistic and accessible, HVAC companies can boost conversions by 10-30% on average and even increase average ticket size HVAC. While a customer may initially think they can afford only a cheap $6,000 HVAC system, by dividing the sum of payment by 24-36 instalments, they see they can get better and more expensive $10,000 equipment and enjoy greater comfort and energy efficiency.

Here is a quick comparison of HVAC financing options that shows that in-house financing is a winning offer:

• Personal loans are usually given by banks for 3-7 years, but they come with higher interest rates (6-36%) and require a lengthy, bureaucratic approval procedure. Thus, only customers with an ideal credit record can get a loan on good terms.
• Home equity loans and lines of credit (HELOCs) offer lower interest rates (4-8%) and can be tax-deductible, but the amount of paperwork is considerable.
• HVAC contractor financing often comes with 0% interest and flexible repayment terms for 12-24 months. Yet, the option is restricted to specific brands and is sometimes associated with high retroactive rates after a promotional period.
• Credit cards. Some banks’ credit cards provide rewards and cashback, thus reducing the cost of HVAC purchases. They may also offer a grace period with 0% interest rates, but this period is usually smaller than that of in-house financing offers. Besides, a negative balance on credit cards affects the clients’ credit score and contributes to debt accumulation.
• Government and utility rebates. Some clients are eligible for rebates and credits under the ENERGY STAR program and the Inflation Reduction Act, which allow up to $3,200 in HVAC renovation savings. Yet, not many citizens can meet the strict requirements and get their applications approved. The process of getting the rebate is also quite lengthy.

This way, as you can see, in-house financing is the most accessible option for closing a deal quickly and on good terms, both for the client and the business.

Trends Shaping HVAC Financing

HVAC financing is a timely measure that goes hand in hand with modern trends in the industry, such as:

• The USA and many European countries are moving towards greater environmental friendliness and a low carbon footprint, thus fostering HVAC system renovations in residential premises and commercial HVAC projects.
• Green finance is on the rise, with almost half of homeowners considering loans for energy-efficient systems using state grants and rebates.
• Loan approval gets quicker and more transparent with the rise of digital lending platforms and systems.
• Intelligent HVAC systems with remote controls via IoT equipment are gaining momentum, with demand for such systems growing nationwide.

The Future of HVAC Financing

By looking at the broader tech market development, we can also predict the avenues for further HVAC financing development as follows:

• Subscription models (e.g., HVAC-as-a-service) also enjoy increasing demand due to the affordability of monthly payments.
• Governmental incentives are expected to rise and diversify in line with the government’s efforts to reach carbon neutrality goals by 2050.
• It’s also necessary to keep the growing use of AI for lending in mind, as greater AI adoption is also going to push the development of HVAC financing further.
• Blockchain technology is increasingly adopted to enhance transaction transparency and secure payment tracking, especially for governmental grants and HVAC rebates.

Why HVAC Businesses Should Offer HVAC Financing

While the introduction of in-house financing may seem risky and technically complex for an HVAC business, modern technology addresses these bottlenecks and makes the process truly hassle-free. Offering this new method of paying for the HVAC purchase comes with many business benefits, such as:

• Control of all terms. You set the repayment period and conditions without relying on banks and third-party lending firms, thus making the loan more affordable to clients and lucrative for you.
• You simplify HVAC financing for clients without sending them to a bank for a lengthy loan application. This approach is sure to boost customer retention HVAC companies often struggle with.
• By offering personalized, branded financing options, you make your customer relationships more personal and professional, thus contributing to client loyalty.
• This financing variant is highly scalable, allowing you to start small to test the waters and then scale up if everything goes well.

All of these features of in-house HVAC financing are sure to translate into close rate improvement for HVAC and set your business on a long-term growth trajectory. Now, let’s proceed from the ‘why’ to the ‘how’ and clarify how to offer financing as an HVAC contractor.

What Is Loan Origination Software and Why You Need It

If you’ve decided to set up in-house HVAC financing for customers, the best way to go with this project is to use a loan origination software (LOS) platform. The LOS is an all-in-one digital system that automates the entire process of loan applications and credit checks without errors or compliance flaws. By looking at the example of ABLE Platform’s loan origination software for contractors, you can see that LOS is your sure way to:

• Save time. Process automation makes the full loan lifecycle easier and more manageable.
• Reduce human errors. Smart technology removes the risk of human error in simple, repetitive tasks.
• Ensure regulatory compliance. High-quality LOS systems come with integrated compliance monitoring and reporting tools.
• Offer a positive, branded customer experience. Customers are sure to feel more satisfied and loyal if they receive a customer-centric, quick loan service from your HVAC company.

Let’s consider a real-life example to see how a LOS can help you grow HVAC client base and close more HVAC deals. Suppose your average HVAC check ranges from $8,000 to $10,000, which not every client can afford to pay upfront. With a branded LOS, you can complete automated credit checks and issue an HVAC financing decision within minutes. The loan offer will be personalized based on the applicant’s unique case and provided data, thus giving you and your client a fair deal without operational headaches.

How LOS Drives 25% More HVAC Clients

Statistics say that the introduction of LOS systems in an HVAC business can effectively streamline the entire financing process. Your clients apply online, get instant approvals, and sign all documents digitally. This simple and quick process inevitably leads to higher conversions and boosts close rates by 15-25% to facilitate your business growth. Thus, LOS adoption in the HVAC industry is one of the modern trends of loan origination software adoption.

Getting Started with HVAC Financing: A Simple Plan

Here is a clear and actionable roadmap for starting HVAC financing for customers to boost sales and satisfaction:

• Start by choosing a loan origination system. It’s vital to double-check that the LOS possesses HVAC-specific features and suits your business needs.
• Customize HVAC financing options. Stipulate the options you’re ready to offer, such as loans for 12-36 months, 0% interest, and other terms for the creation of flexible payment plans.
• Train your staff and launch the LOS. Ready-to-launch, white-label solutions like ABLE Platform™ require no tech expertise and easily integrate into the existing architecture of any business.

This easy and convenient setup helps you start in-house financing without extensive software investments and delays for customization and staff preparation. The compatibility of ABLE™ software also ensures your business processes run without disruption or downtime.

Start Winning More Clients Today with ABLE Platform™

The promised 25% increase in closed deals is not an empty promise. In-house LOS systems are indeed a great, innovative option for accessing financing for high-ticket services and closing expensive deals by means of removing the high upfront payment requirement. Besides, the in-house model of financing for HVAC eliminates the need for lengthy and problematic loan applications in local banks and increases your clients’ chances of accessing AC financing.

Let ABLE Platform prevent your missed sales and customer abandonment. Use our feature-rich, safe, and functional LOS platform as one of your strategic HVAC contractor tools to grow your business and boost sales.