Navigating HVAC Price Increases: The Importance of Having the Right Lending Partner

The HVAC industry has faced significant shifts over the past few years — from navigating repairs and replacements during COVID to supply chain shortages and price increases. And now, another major change is on the horizon: the A2L refrigerant transition.

If you’ve been in the industry a while, refrigerant changes are nothing new. You’ve likely already started preparing your team and adjusting your inventory for the A2L transition. But let’s consider how these refrigerant transitions will affect your customers.

With HVAC prices nearly doubling since 2020, and A2L equipment likely adding to the cost, passing these expenses to your customers may be unavoidable.

This is where offering financing can help. By providing flexible lending solutions, you can make these price increases more manageable for your customers — without sacrificing your bottom line.

Offering Multiple Lending Solutions

As you know, HVAC services are often an emergency expense that many homeowners aren’t financially prepared for, especially with HVAC prices increasing. A recent study from the Federal Reserve found that 37% of Americans can’t cover a $400 emergency expense with cash or cash equivalent.

Financing options improve your customers’ experience by helping them afford your services. There are many lending solutions you can offer, including:

• Promotional credit cards: These revolving lines of credit allow customers to pay for future services without another credit pull. However, they often come with high interest rates and limited usage.
• Fixed-rate installment loans: The most common loan type, these provide your customers with predictable monthly payments over a set period, making them easier to budget for.
• Same-as-cash loans: These work like installment loans but allow customers to pay off the loan within a set promotional period to avoid paying interest. This is ideal for customers who can’t pay upfront but can manage the full repayment within the promotional period.
• HVAC leasing: For homeowners who don’t qualify for other loans, leasing provides an alternative. Customers won’t own the system but also won’t have to cover maintenance costs. Keep in mind, leasing comes with higher interest rates, and customers may not own the system at the end of the term. This is only an option for equipment installations, not service-only work.

Since every homeowner’s financial situation is different, we recommend offering multiple lending solutions so your customers can find the right match.

Vetting Potential Lending Partners

Finding the right lending partner can save you time and money. Sure, you can offer payment plans yourself, but that can be risky. If your customers don’t pay you back, you’re left chasing them down and handling collections, taking valuable time away from your business. Lenders do the hard work for you. Once the job is complete and the lender pays you, your work is done.

However, not all lenders are created equal, especially as lending standards tighten. The increased risk of a decline makes it even more important to partner with a lender who can accommodate most — if not all — of your customers.

Here are a few questions to consider and ask potential lenders before making a decision:

• What will you finance?

• Who will you approve for financing?

• Do you charge dealer fees?

Offering a range of flexible lending solutions benefits both you and your customers. It helps your homeowners afford necessary services while helping you close more jobs — especially in a market where factors like the A2L refrigerant transition result in HVAC price increases. If customers can’t afford your services, they’ll find someone they can afford. Financing can be the key to making your services more accessible and ensuring you don’t lose out on work due to cost.