Boiler on the blink again and fed up of having to pay a handsome sum to get it repaired? It sounds as though it’s time to replace your old boiler with a new energy-efficient model. But before you do, it’s important to determine which payment option is best suited to you and your circumstances. Thankfully, there are many different ways to pay for a boiler and the installation, including purchasing with finance.
We’ve put together a guide on boiler finance and other payment options to help you decide how you should pay for your replacement boiler.
Why Get a Loan for a Boiler?
If you need a replacement boiler but can’t find the money to purchase one upfront, buying a boiler on finance could be the best option for you. By taking out a boiler finance agreement, you can pay for your new boiler in monthly instalments, which means you can spread the cost over a set number of years and make paying for the boiler more manageable. Many heating companies offer ways to purchase a boiler replacement on finance and some even offer interest free boiler finance agreements.
You’ll need to apply for boiler finance through a lender who will pay for the upfront cost, and you’ll then pay the money back (plus any interest) to the lender over the agreed number of years. Some agreements will require you to pay a deposit as well. As you would expect with any loan, your credit rating will be checked so that the lender can be sure that you’ll be able to pay back the money each month.
Can Your Credit Score Affect Your Application
Yes, it can. If you have a good credit score, it’s highly unlikely that your application will be refused. However, if you have a poor credit history, you may struggle to get a loan for a new boiler. Some companies perform a soft credit check for customers who have a bad credit history and want to pay monthly for a boiler replacement, so don’t be put off trying if taking out boiler finance is the best option for you. Just be aware that you may have to make higher repayments each month if you don’t have a perfect credit score.
Typical Finance Packages
If you want to spread the cost of a new boiler and the installation with finance, then you should explore all of the finance options available. There are three finance options to consider, including interest free credit, interest bearing finance and buy now, pay later agreements. We’re now going to take a look at how each finance package differs and weigh up their advantages and disadvantages.
The best thing about interest free boiler finance is that you can not only spread out the cost but at no additional cost as there is no interest to pay. You must have a good credit rating to take out interest free finance, so it won’t be an option for you if your credit history is bad. In addition to zero interest costs, the upfront costs are lower. The only downsides of choosing interest free are that repayment periods tend to be capped at 2 years and your installer options will be limited because you’ll need to use a company that’s registered by the FCA.
When you take on an interest bearing boiler finance plan, you’ll need to pay an interest rate in addition to the original loan balance. So, not only will you repay what you borrow but you also have to pay the interest to compensate the lender for lending the money to you. Interest bearing finance deals tend to be anywhere from 3 to 10 years, and some require no upfront cost. The monthly repayments should be lower because you can spread the cost for longer, but you’ll need to have a good credit rating and use an FCA registered installer.
Buy Now, Pay Later
This type of boiler finance allows you to delay repayments, usually for up to 12 months. Most deals are interest baring, however, some are interest free provided you pay off the whole loan within the first year. Advantages include interest free if paid back in the first 12 months and your monthly repayment amounts should be lower too. Again, you’ll need a good credit score and you must use an installer who is FCA registered if you’re thinking about applying for a buy now, pay later finance deal. Another disadvantage is that you’ll pay more interest than the other boiler finance options if you fail to pay off the loan by the end of year one.
Repayment Example for £2,500 Boiler Installation
|Interest Free||Interest Bearing||Buy Now, Pay Later|
|Repayment Period||2 years / 24 months||3 years / 36 months||5 years / 60 months|
|Upfront Payment||£500 deposit||£0 deposit||£250 deposit|
|Interest Rate||Interest free||9.9% APR||14.9% APR|
Which Companies Offer Boiler Finance?
Many companies offer boiler finance deals, including energy providers, heating installation businesses and some boiler manufacturers, so there should be plenty of different packages on the market. Smaller companies are often a bit cheaper than the national brands, and you may even find that one of your local installers can provide you with a great boiler finance deal.
Here we compare deals from just some of the companies who might be able to offer you a boiler finance package.
|Company||Boiler Finance Option||Deposit||APR||Repayment Period|
|British Gas||Interest Free||£0||0% interest||3 years|
|British Gas||Interest Bearing||£0||9.9%||3, 5 8 or 10 years|
|BOXT||Interest Bearing||£0 – 50%||9.9%||5 or 10 years|
|Glow Green||Interest Free||£0||0% interest||2 years|
|HomeServe||Interest Bearing||£0||9.9%||3 to 10 years|
|E.ON||Interest Bearing||£0||7.9%||5 or 7 years|
|Swale Heating||Buy Now, Pay Later||10%||0% if paid in full after 12 months 14.9%||10 years|
|Swale Heating||Interest Bearing||10%||9.9%||3 or 5 years|
Before you agree to anything, be sure to compare a range of boiler finance quotes and check the conditions of each finance deal.
Other Ways to Pay
If you decide that boiler finance isn’t the best option for you, there are a few other ways to pay for your new boiler and the installation, such as:
- Cash: The majority of companies don’t accept cash or cheques nowadays, but there will be a few who will be happy for you to pay this way. Most will ask that you pay by direct debit or transfer the money directly into their bank account via BACS. By doing so, you can use any installer you wish, never pay any interest and you’ll own the boiler from the word go.
- Credit Card: Paying for your new boiler using a credit card can be one of the best ways, provided you have a 0% purchase credit card that lets you spread the cost over a given period interest free. In addition to not having to pay anything upfront, your installer options won’t be restricted. You just need to make sure you pay off the credit card in the interest free period.
- Home Improvement Loan: You can ask a lender or even your bank if they’d be willing to give you a home improvement loan to cover the cost of your boiler installation. As with a boiler finance deal, you’ll borrow the money, then pay it back in monthly instalments over a set period of time. You’ll probably have to pay interest as well. The benefits of a home improvement loan include quick access to money and the ability to choose how many months or years you want to pay back the loan. Most people who have a good credit rating take out unsecured home improvement loans with fixed interest rates. If you’re a homeowner or you have a mortgage, the alternative is a secured home improvement loan, which is where you borrow money against the value of your property.
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