AC Unit Financing Options
You may rely on AC unit financing to cover the high cost of an air conditioning unit or repairs. Options include personal loans, HELOCs, home equity loans, credit cards, and HVAC company financing.
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In most parts of the country, a functional cooling system is necessary for home comfort and air quality. Air conditioning is a key feature buyers and potential tenants look for, so a functional AC unit could also increase your property’s value.
Unfortunately, replacing an air conditioning unit or adding one to your HVAC system is no small task. Having a new air conditioner installed generally costs from $3,350 to $5,912, according to Home Guide.
Because the costs are high, many homeowners turn to AC loans to pay for a new system. This guide will help you pick a lender and choose the type of AC unit financing that’s right for you.
In this guide:
- Loans for air conditioner financing
- Other methods of air conditioner financing
- Frequently asked questions
Loans for air conditioner financing
Compare AC Loans
- Fixed rate loans from 3.49% APR
- Funds available as soon as the same day
- Minimum credit score of 660
- Fixed rates beginning at 7.99% APR
- You can check rates without hurting your credit score
- Quick funding
- Rates starting at 9.95%
- Loan amounts from $2,000 – $35,000
- Requires a 580 credit score or better
There are many ways to finance the purchase of a new air conditioner, including using a home equity loan or a credit card. For many homeowners, however, the easiest option is a personal loan.
Personal loans tend to have lower interest rates than credit cards and can be easier to qualify for than home equity loans. Here is a list of personal loan lenders to help you find an AC loan that works best for you.
LightStream
Rates (APR)
3.49% – 19.99%
with AutoPay
Loan Amounts
$5,000 – $100,000
Credit Score
660+
LightStream offers personal loans with a streamlined application process, making them an easy lender to use for AC financing. LightStream offers competitive rates, no fees, and a program where they will beat any competitor’s rate by 0.10 percentage points. LightStream is a great option for borrowers who have good or fair credit.
- Credit score category: Good, fair
- Soft credit pull to check rates: Not available
- Deposit time: As soon as the same day
- Origination fee: 0%
- Late fee: None
- Discounts: 0.50% interest rate reduction for enrolling in autopay
- Repayment terms: 24 – 144 months
Upgrade
Rates (APR)
7.99% – 35.97%
Loan Amounts
$1,000 – $35,000
Credit Score
620+
Upgrade is a great option for borrowers with bad or fair credit looking for HVAC financing. In addition to offering personal loans, Upgrade offers free credit monitoring and online educational tools to their customers. Once you accept your loan offer, you could receive loan proceeds as soon as the next day.
- Credit score category: Fair, bad
- Soft credit pull to check rates: Yes
- Deposit time: As soon as the next day
- Origination fee: 2.9% – 8%
- Late fee: $10
- Repayment terms: 36 or 60 months
LendingClub
Rates (APR)
10.68% – 35.89%
Loan Amounts
$1,000 – $40,000
Credit Score
600+
LendingClub has become a staple in today’s peer-to-peer lending marketplace. Their minimum loan amounts make them a good option for those who need smaller loans. If you have fair or bad credit, LendingClub is a good option to help finance your AC unit.
- Credit score category: Fair, bad
- Soft credit pull to check rates: Yes
- Deposit time: As soon as 4 business days
- Origination fee: 1% – 6%
- Late fee: $15 or 5% of payment amount
- Repayment terms: 36 or 60 months
Avant
Rates (APR)
9.95% – 35.99%
Loan Amounts
$2,000 – $35,000
Credit Score
580+
Founded in 2012, Avant stands out in the personal lending space because of its ease of use and high approval rates for borrowers. They are a good option for borrowers with fair or bad credit. You can easily check your rates without affecting your credit score before going through the entire application process.
- Credit score category: Fair, bad
- Soft credit pull to check rates: Yes
- Deposit time: As soon as the next day
- Origination fee: 4.75%
- Late fee: $25
- Repayment terms: 24 – 60 months
>> Read More: Best Home Improvement Loans
Other methods of air conditioner financing
The best way to pay for a new air conditioner is to plan a budget ahead of time and use personal savings. This lets you avoid finding a lender, the loan application process, and paying interest.
Borrowing doesn’t have to be a bad option, though, as long as you can afford to keep up with monthly payments. If a personal loan isn’t the best route for financing your AC unit—maybe because you’re unable to qualify for a good rate—consider these other ways to cover the cost.
- Home equity loans
- Home equity lines of credit (HELOC)
- Federal grants for low-income households
- Company financing
- Credit cards
Home equity loans
Home equity loans let you borrow against equity you’ve built in your house. You can find these loans from local banks, credit unions, or online lenders that specialize in mortgage loans or home equity loans.
Pros
- A potentially lower interest rate than other financing options, because the loan is secured by your home.
- You may be able to deduct interest payments on your taxes.
Cons
- You risk losing your house if you can’t make payments.
- You generally need to have built equity (i.e. paid down your mortgage) to qualify, around 10% to 20%.
- You may need to pay upfront costs for a home equity loan, such as the cost of an appraisal and origination fees.
- Credit decisions are usually slower than for personal loans.
Home equity lines of credit (HELOC)
A home equity line of credit also taps into your home equity, but you get access to a line of credit you can use as needed, instead of a fixed loan amount.
HELOCs function much like credit cards. You can use funds as needed, repay as you borrow, and borrow more money up to your credit limit over time. This flexibility can be a big benefit if you’re doing ongoing AC repairs or other home improvement work.
Pros
- Interest rates may be lower than for personal loans.
- Interest payments may be tax deductible.
Cons
- Your house is on the line if you can’t repay what you borrow.
- You can’t get a HELOC if you haven’t built home equity.
- Appraisal expenses and additional fees may mean higher upfront costs.
- Most have variable interest rates, so your monthly costs could change over time.
- The application, approval, and borrowing process is often slow, just as with home equity loans.
Federal grants for low-income households
A program under the U.S. Department of Health and Human Services, the Low Income Home Energy Assistance Program (LIHEAP), provides grants to help low-income families with home energy costs.
Some states let you use the grant to fix broken or inefficient heating or AC systems. Your state may also offer a similar state-based energy assistance or energy efficiency funding program, so check your state government website for other options.
Pros
- Money doesn’t need to be repaid
Cons
- Only low-income households will qualify
Financing through an HVAC company
Some HVAC companies offer air conditioning financing for customers. Typically, this comes in the form of an installment loan similar to the personal loans covered above. The company may connect you with a partner lender or collect payments directly over time.
Company financing can be convenient, but make sure to compare the interest rates the HVAC company offers with other AC loan options to avoid an inflated rate from the company.
Pros
- Convenience—you only have to work with one company.
- You should be able to borrow exactly the amount needed.
Cons
- The rates can be higher than for a personal loan from a bank, credit union, or online lender.
Credit cards
If your AC unit only needs minor work, such as recharging the refrigerant or cleaning the compressor, you may be able to use a credit card to cover the costs.
However, credit cards typically come with much higher interest rates than loans or equity lines of credit, so this debt could cost you more if you carry a balance.
On the other hand, a credit card could be a smart option if you’ve just signed up and have to meet minimum spending requirements for a bonus, or if the card comes with an introductory 0% APR. Just plan to pay off the balance before the intro APR ends to avoid paying a fortune in interest.
Pros
- Pay no interest if you pay off the balance of an introductory 0% APR period.
- May not need to take out a new credit card.
Cons
- Interest rates can be very high if you don’t pay off the balance during the introductory period.
- May increase your credit utilization ratio which could impact your credit score.
Frequently asked questions
The costs of repairing or replacing an air conditioner vary based on your location and which repairs you need. Here’s a rough estimate of what some common work could cost, according to HomeGuide:
- Replace fan motor: $225 to $700
- Recharge refrigerant: $250 to $750
- Replace drain pan: $250 to $575
- Flush drain line: $75 to $250
You can get quotes from AC contractors in your area to get a clearer idea of how much your repairs will cost before making a commitment or seeking financing.
It is definitely possible to get air conditioning financing with bad credit, though you may face higher interest rates. Your chances may be better if you can access home equity with a HELOC or home equity loan.
You can also check out financing options from bad credit lenders with more flexible credit requirements.
Recap of AC unit loans
| Lender | Loan Amounts | Minimum Credit Score |
| LightStream | $5,000 – $100,000 | 660 |
| Upgrade | $1,000 – $35,000 | 620 |
| LendingClub | $1,000 – $40,000 | 600 |
| Avant | $2,000 – $35,000 | 580 |
