Many heating and air companies now offer the option to lease an HVAC unit rather than buy one.
It can be tempting because the prices of new units are higher than ever, and it's a big investment for any homeowner.
Yet one homeowner just learned that leasing your air conditioning system or furnace could end up costing more in the long run than if you purchased it upfront.
Tim Pride signed a contract with a company five years ago for a new HVAC system costing $22,000, thinking he was buying the equipment.
"I thought I was signing up for paying it off over a period of time,” he said.
RELATED STORY | How to save on produce this summer, despite expected price increases
But he didn’t read the contract carefully, and the agreement he signed was to lease the system.
"I'd never heard of leasing a major appliance like a furnace before,” he said.
Pride added, "I came to find out we are leasing the furnace; we don't own the furnace."
It turns out that he agreed to a 10-year lease costing a total of $33,000 after the financing charges.
WATCH A HOMEOWNER REACT TO LEARNING HE WAS ONLY LEASING HIS FURNACE AND AC UNIT
Know the downsides of leasing
Kevin Brasler of Consumers’ Checkbook believes HVAC companies entice consumers with little or bad credit toward the leasing option.
He says a leasing plan costs homeowners much more than if they bought the unit with cash.
RELATED STORY | Homebuyer targeted by mortgage wire fraud loses $7,500 to fake title company
“You're financing this purchase at a pretty high interest rate, actually, and you never get to own the thing,” he said.
Pride’s HVAC company says the lease he signed was clear and that there are advantages. His program covers the cost of the unit, installation, and all service calls with no upfront cost.
But Brasler cautions homeowners to understand what happens after the contract ends.
“Is the company going to come and pack up this furnace or air conditioner or heat pump and export it or sell it to someone else?” he said. “I think likely what happens is the company then gives that customer the hard sell on a new piece of equipment.”
Pride regrets not understanding the fine print in the contract before he signed it.
Now he’s warning others to read the contract carefully before signing, so you don’t waste your money.
_________________________________________________
"Don't Waste Your Money" is a registered trademark of Scripps Media, Inc. ("Scripps").
Follow John:
- Facebook:John Matarese Money
- Instagram: @johnmataresemoney
- X/Twitter: @JohnMatarese
For more consumer news and money saving advice, go to www.dontwasteyourmoney.com
