Should You Buy or Rent-to-Own? 4 Ways to Purchase a New Furnace or AC System.

Time to buy a new HVAC system for your home? Make sure you understand the complete terms of your contract with our guide to furnace & AC system purchase options.

How would you feel if you suddenly found out that without your knowledge, your home had a lien on it for $14,000 due to a rent-to-own contract you (or the previous owner) signed for a new furnace or AC system?

Or, as in the case of an Ontario woman who wanted to terminate a rent-to-own contract she’d signed, that she’d have to pay 3x the cost of the equipment to do so….some $32,000+ for a new home comfort system! 

CBC News: ‘I was livid’: Single mom hit with $32,000 bill to break furnace, air conditioner rental contract

ProSolutions Plumbing, Heating & Air Conditioning Inc., like other reputable HVAC dealers, decry such stories. Those tactics damage the reputation of the industry as a whole. Today, Alberta and Ontario have banned unethical and unscrupulous business practices involving unsolicited door to door sales of HVAC equipment. However, phone solicitation by such companies and social media promotion offering HVAC services, including furnace inspection and cleaning, remain legal.

HVAC equipment is a high-cost investment for most people. There are four main ways to acquire it:

1. Outright HVAC system purchase
2. Finance your HVAC system purchase
3. Rent an HVAC system
4. “Rent to Own” an HVAC System

Purchase a new furnace with cash

If you can afford to purchase a new furnace system this way, it is the best. You will pay no interest and can oftentimes take advantage of government or manufacturer rebates to save more upfront.

You pay for everything upfront and are responsible for all future maintenance (outside of warranty coverage). Many customers pay extra for an annual furnace service maintenance plan like the one ProSolutions Inc. offers.

Financing your HVAC purchase. A smart option for many homeowners.

Plenty of customers take this route. With ProSolutions Inc., customers have the option to use their own bank, or our premier credit partner Financeit.ca. Often, the cost of credit is worth it for many people that do not wish to dip into their savings, investments or extend the equity against their home.

Your terms will include a specified contract length, market-rate interest charges, and an opportunity to pay down the contract faster. With ProSolutions Inc., the contract can be as long as 15 years or 180 months, with the chance to pay it down earlier without any penalty.

ProSolutions Inc. customers also have an option to finance a furnace from Home Depot using the HD credit card. Home Depot, depending on their current finance promotion, provide 12-36 months of interest-free payments. You can take advantage of any credit promotion that Home Depot offers on in-store purchases.

Monthly finance payments are generally higher than monthly rental payments, to have HVAC customer ownership paid down faster.  

Renting HVAC equipment

The usual reason for choosing a monthly rental option is the high cost of HVAC equipment. Customers rent the home comfort system without ever getting into ownership. The rental is paid monthly and does not stop. If the house is sold, reputable furnace dealers will arrange for the equipment rental agreement to be transferred to a new owner or there will be an arrangement where the new owner can purchase the equipment.

The primary benefit is that the HVAC dealer you rent from is responsible for making sure you have a working furnace at all times. They are responsible for all maintenance and emergencies. The renter receives peace of mind, especially at minus 30 on New Year’s Eve.

There are a couple of significant drawbacks:

1.  Over the HVAC rental lifetime, the customer is likely to have paid at least 2x the value, or more, for the HVAC equipment & system.
2. Owning an HVAC system adds to the value of a home. If it’s rented and is not a component of the property’s value, the actual sale price of the house may be reduced.

At ProSolutions Inc., we do not offer rental HVAC equipment.

Rent-to-own HVAC equipment

A Rent-to-own HVAC Contract is the situation the lady in Ontario from the CBC news article found herself in. Trapped in a long, litigious rental contract with high early payment penalties. We recommend avoiding these payment terms when purchasing your home’s comfort system. 

The premise of Rent-to-Own HVAC equipment is that by paying a low monthly rental fee regularly over the term of the contract that the customer will end up owning the system once the full term is complete.

The problem stories at the top of this article are mainly due to rent-to-own contracts put in place by door to door salespeople. The contract terms are the main issue, and the disclosure of the appropriate and reasonable warnings surrounding these terms seems to be at the heart of the dangers of this style of financial commitment. 

Consider this; these contracts last from 10-15 years:

• Interest and inflation charges increase over the years
• The contract value is determined at its 10-15 year completion.

The HVAC dealer gets an alternative lender to finance the contract, possibly every five years. To ensure it recoups its money on the rental contract, the lender puts a lien on the customer’s property as collateral. That means the customer can’t sell the property until the loan is paid off. 

Would you consider that a dangerous financial commitment that you would like to have disclosed BEFORE you were to “sign on the dotted line”?

In the case of a buyout, if the customer decides, as the Ontario woman did, to terminate the contract early, the HVAC rental companies attempt to collect the full value of the 10 to 15 year contract.

Lessons to be learned when purchasing a new furnace or AC system

“If it seems too good to be true, it usually is.”

Deceptive practices occur in every industry. In the case of the HVAC industry, the Alberta and Ontario governments, for example, have banned certain sales practices that have negatively impacted consumers and their ability to get upfront, fair and honest estimating and options.

However, the fundamental responsibility lies with the consumer to check the contract terms being offered, and if concerned, to seek out advice from consumer advocates and lawyers before putting a signature to any agreement.

When you are ready to purchase a new furnace, we recommend speaking to several of the top-rated furnace installation companies in your area. If you’re in Edmonton, give ProSolutions Inc. a chance to earn your business.

ProSolutions Inc., as a respected member of the HVAC industry in Alberta, is very conscious of making sure that their customers take the right steps in financing HVAC equipment for their home. We do not want our customers running into financial issues when dealing with us. We are committed and work hard to ensure that all are treated fairly in every transaction they conduct with our company.