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Somebody has quoted you a monthly payment
Five ways a heating and cooling job gets presented to a household, crossed with the four kinds of people offering to fund it. What each is actually doing, what to ask for first, and the one arrangement that attaches to your house rather than to you.
Three things that apply to every answer below
- We do not arrange finance, and that is the point
We introduce no lenders, are paid by none, and receive nothing from anybody who funds your work. That is not modesty — it is the only arrangement under which our advice about your equipment is worth anything. A contractor who is paid a margin on the lending has a reason to prefer the larger job, and you have no way to see it.
- Ask for one number, in dollars, for the work
Equipment and labour, itemised, with nothing deducted for an incentive and nothing added for funding. That figure is what you compare between contractors. A monthly payment cannot be compared with anything, which is precisely why it is offered.
- This is not financial advice, and we are not tax advisers
What follows is what we have watched happen to customers, written down so that you can ask better questions. It is not advice about borrowing, about your taxes or about your property. For those, ask somebody whose income does not depend on you buying a furnace.
Work out what you are actually being offered
Pick how it was presented and pick who is offering to fund it. Every answer below is on this page whether you pick anything or not — the picker only narrows it down.
This is the one arrangement on the page that deserves a separate warning, and it is the one most often explained least. Programmes of this kind — in California these are generally property-assessed financing for energy work — are repaid as an assessment on the property tax bill rather than as a personal loan. Two things follow that people are routinely surprised by later. It sits on the property, which means it becomes part of the picture when the house is sold or refinanced, and mortgage lenders commonly take a view on that — frequently requiring it to be paid off at closing. And the approval usually turns on the property rather than on ordinary lending criteria, which is what makes it available at the door and also what makes it a poor thing to agree to quickly. We do not arrange these, we are not paid by anybody who does, and we will not advise you on one. If somebody has put one in front of you, the useful questions are for your mortgage lender and a real estate attorney, and the useful answer is that there is no reason at all to decide today. We will price the work and it will still be there next week.
Ask for the total, in dollars, with no funding attached. If you cannot get it, stop there.
This is the whole test and it takes one sentence on the telephone. Any contractor can produce a total price for the work, because they have to know it themselves. A refusal, a delay, or an answer that keeps returning to the monthly figure is telling you something that no amount of further conversation will improve on.
Why the monthly figure is the one you are shown
Because it cannot be compared. Two contractors quoting a total of eleven thousand and fourteen thousand are immediately comparable. Two contractors quoting a hundred and forty a month are not, unless you also know the term, the rate, the fees and what happens at the end — and by the time you know all four, the conversation has moved on.
It also changes what feels affordable. A number that fits next to a phone bill feels like a small decision, and a heating and cooling replacement is not a small decision. That is not an accident of presentation; it is the reason for it.
What to ask for, in this order: the total price of the work in dollars; the amount financed; the annual percentage rate; the term in months; any origination, dealer or setup fee, including one folded into the price; and the total you will have paid at the end. The gap between the first number and the last is the cost of the funding, and it is frequently larger than people expect.
Find out in writing what happens on the day the period ends.
Zero per cent for a period is a real and sometimes excellent thing. What decides whether it is good for you is the arrangement at the end of it, and there are two very different kinds that sound identical when described out loud.
The two kinds of zero, and how to tell them apart
Genuinely interest-free over the term. The amount is divided across the months, you pay it off, and there is nothing at the end. Fine, and worth taking if the cash price is the same.
Deferred interest. Interest accrues during the promotional period and is waived only if the whole balance is cleared before it ends. Miss the date, or make only the suggested minimum payments, and the accrued interest for the entire period can be added at once. The monthly figure quoted to you is frequently not large enough to clear the balance in time, which is the part that catches people.
Ask directly: if I make exactly the payment you are quoting, will the balance be zero on the last day of the promotional period? Get the answer in writing. And check whether the cash price is lower than the financed price — where it is, the difference is the cost of the finance, appearing somewhere other than the interest rate.
Get the price with no incentive in it at all. Then treat any incentive as a bonus, not a discount.
A quote with a rebate already deducted is a quote for a number that may not arrive. Programmes have conditions, budgets, deadlines and eligibility rules, they are administered by people who are not your contractor, and they change — sometimes during the job.
How incentives go wrong, and what we will do about them
The failures we see are almost always one of four. The equipment installed did not meet the efficiency threshold the programme required, and nobody checked before ordering. The paperwork had to be submitted within a window that had already closed. The programme was funded on a first-come basis and ran out. Or the household did not qualify on a criterion nobody had asked about.
On tax credits there is a further point that gets glossed: a credit reduces tax owed, and what it is worth to a particular household depends on that household’s tax position. A contractor who tells you what a credit will be worth to you is answering a question they have no information to answer. We are not tax advisers and we will not do that.
What we will do: tell you the equipment’s efficiency figures accurately so you can check them against any programme yourself, supply model numbers, invoices and certificates for an application, and point you at the utility or the programme administrator. What we will not do is deduct money from a quote as though it were certain.
Nothing in this trade gets cheaper by being decided in an hour. Ask for it in writing and sleep on it.
A price that expires at the end of the visit is a technique, and it is the single most reliable indicator that the conversation is a sales call rather than a diagnosis. Equipment costs what it costs. Labour costs what it costs. Neither changes because you took a day.
Why the urgency is there, and what it usually accompanies
Time pressure exists to prevent two things: a second opinion, and a quiet read of the paperwork. Both of those are exactly what you should do, and both are cheap.
It is worth separating genuine urgency from manufactured urgency, because genuine urgency does exist. Real: a gas appliance with a failed combustion test or a suspected cracked heat exchanger, which is a safety matter and should be dealt with immediately; no heat in a cold snap with a vulnerable person in the house; no cooling in a heatwave, likewise. Not real: a discount that expires, a technician who is only in the area today, a warning that prices go up on Monday, and a replacement recommended during a maintenance visit for a system that is still running.
If a system has genuinely failed and you need it dealt with now, that is a reason to move quickly on the repair. It is not a reason to sign a ten-year funding agreement the same afternoon.
Separate the three things and price each one: the equipment, the labour, and the ongoing plan.
Where a quote bundles a replacement with a maintenance agreement, a membership or an extended warranty, the bundle makes each part invisible. All three are legitimate things to buy. None of them should be bought without knowing what it costs on its own.
What to pull apart, and what to ask about each piece
- The maintenance plan. How many visits a year, what is actually done on each one, and what happens if you cancel. A plan is worth having where the visits are real and the readings are recorded. A plan that is a discount card with a monthly charge is not.
- The extended warranty. Who underwrites it — the manufacturer, the contractor, or a third party? What does it cover that the manufacturer’s own parts warranty does not? Does it survive the contractor going out of business? That last question is the one that matters and the one least often asked.
- The membership. Priority scheduling and a discount on labour, generally. Fine if you use it. Worth checking whether the discount applies to a price that was raised to accommodate it.
Our own position, so you know where we stand: we sell maintenance as maintenance, with the visits and the readings written down, and it is priced on its own line. We do not require it, it is not a condition of anything, and declining it does not change what you pay for the work.
If it is the contractor’s own plan
In practice this nearly always means a third-party lender the contractor has a relationship with, presented as their own. That is not sinister in itself — it is how most of the industry works — but it does mean two things are worth knowing.
First, ask who the actual lender is and read that company’s terms rather than the contractor’s summary of them. Second, ask whether there is a fee for arranging it and whether the cash price differs from the financed price. Where a dealer fee exists it is commonly built into the job price, which means the customer paying cash is quoted the same higher number.
The useful move is simple: ask for the cash price and the financed price as two separate figures. A contractor who will give you both is being straight with you. A contractor who says they are the same, when a fee exists, has told you something about the rest of the quote.
If it is a third-party lender at the door
The thing to slow down on is the signing itself, because an application taken on a tablet in your kitchen is still a credit agreement and it is still binding. You are entitled to read it, to take it away, and to say no after the technician has left.
Before anything is signed: get the annual percentage rate, the term, the total repayable and every fee, in writing, on paper you keep. Check whether a credit application will be submitted — a formal application is a formal application, wherever it happens. And check what happens if the job changes, which on a replacement it sometimes does: whether the agreement adjusts, and on whose say-so.
One practical note. Where an agreement is signed in your home there are sometimes rights to cancel within a short period, and where there are, they are short and they run from the date of signing rather than from the date you get round to reading it. Read the paperwork the same evening, not the following week.
If it is repaid through the property tax bill
Then read the note at the top of this answer first, because that is the substance of it. Beyond that, the practical points are these.
Find out exactly what the assessment will be, for how many years, and what the total repaid will be over that period. Ask your mortgage lender before you agree, not afterwards — they are the party most likely to have a view, and the view usually arrives at the worst possible moment otherwise. And if you expect to sell within the term, get advice on what happens then, because it is frequently negotiated at closing and frequently not in the seller’s favour.
None of that makes it wrong for everybody. It makes it a decision that wants a week and somebody independent, which is the opposite of how it is usually offered. We do not arrange it, we get nothing from it, and we will price the work the same way whatever you decide.
If you are using your own bank, card or savings
Then this page mostly does not apply to you, and you are in the strongest position of anybody on it — because you can ask for a cash price and compare contractors on one number.
Two things still worth doing. Ask whether the price differs for cash, because where a contractor carries a dealer fee on financed work, an unwary cash customer can be quoted the financed number. And keep the payment traceable. A card or a bank transfer leaves a record; on a job of any size a deposit paid in a way that cannot be traced is a bad idea for both sides.
On deposits generally: a reasonable deposit on a replacement is normal, because equipment has to be ordered. A demand for most of the money before anything arrives is not, and California has rules about how much a home improvement contractor may take up front. Ask what the deposit is for, and expect an answer.
Where this page stops
We will measure the building, tell you what is wrong, price a repair before we mention a replacement, and give you one total in dollars for the work with equipment and labour itemised. That quote is valid for a stated period, it does not go up if you get a second opinion, and it has no incentive deducted from it.
We do not arrange finance, introduce lenders, receive anything from anybody who funds your work, quote monthly payments, promise rebates or tax outcomes, or issue prices that expire. We are not financial advisers, not tax advisers and not attorneys, and nothing on this page is advice from any of those. If a gas appliance has failed a safety check, that is the one thing here that is genuinely urgent — and it is a reason to act on the repair, not a reason to sign anything.