What options do I have for new boiler finance? We evaluate every payment strategy and also contemplate the advantages and disadvantages of each.
You can use many different approaches to pay for your new boiler. There is cash upfront, credit card, no deposit, interest free for 1-3 years, and interest bearing for as many as ten years. It is important to choose the right option for your finances because this is a big commitment.
We think about every way you can pay, regardless of whether they represent great value or not, as well as the pros and cons of each.
‘Cash’ (more likely cheque, debit card, or BACS)
The majority of businesses will accept a deposit as well as the balance following completion. You are free to pay directly into their bank account via BACS or by debit card. There aren’t many companies that accept cash or cheques these days, unless they’re attempting to avoid the VAT.
Advantages of upfront payments
- You’re free to use a sole trader
- Zero interest costs
- The entire amount becomes payable at the start
Interest free provides you with the chance to spread out the boiler finance at no additional cost. You will require a decent credit rating for this though.
Advantages of interest free deals
- Lower upfront costs – typically around 25% deposit
- Zero interest costs
- Repayment periods are normally pegged at 2 years, with monthly payments being more costly than interest bearing deals as a result
- Not accessible to those with low credit ratings
- You need to use a heating company that’s FCA registered, as a result your installer options are limited
This type of boiler finance means you can pay an interest rate in addition to the loan. The bulk of these deals are over 3-10 years and may not require a deposit.
Advantages of interest bearing
- You’re free to spread the costs for longer periods, leading to lower monthly figures
- Can be zero upfront cost
- You’re required to pay an extra sum over and above the installation costs
- A good credit rating is necessary
- You must use an FCA registered installer, limiting your options
Buy now, pay later
Specific boiler finance facilities enable clients to take advantage of a deferred payment period, which is usually 12 months. You won’t have to pay anything until a year after you’ve signed up for finance.
Commonly, if you manage to pay the loan off within these 12 months, it will be interest free. If you fail to do this and allow it to get into the interest period, then the rate shall become back dated to the beginning of the loan period. It will then be spread over the repayment period.
Advantages of buy now, pay later
- Usually zero interest if you’re able to pay it off in 12 months
- You can spread the costs for longer periods, resulting in lower monthly repayment prices
- No upfront costs
- Pay back bigger sums than you would with the other possibilities if you’re unable to pay the loan off in the initial 12 months
- Cannot use it if your credit rating is bad
- Limited choice of installers
- If you fail to pay the loan off in the first 12 months, the interest will be back dated and spread over the loan’s lifetime
You can pay for your new boiler using a credit card. This is great value if it’s 0%. However, there is always a charge for new purchases. Payback periods are normally 12-18 months.
Advantages of credit card
- There’s no need for you to use an FCA registered business, but you’ll still require an installer that takes credit cards
- Interest free if you pay everything off within 12-18 months
- Low upfront cost
- You’ll suffer a charge for balance transfers or new purchases
- If you’re not able to pay off within the 0% period, the interest rate shall be considerably higher after
In addition to these methods there are a number of boiler rent schemes. They can be convenient for some people because a scheme can include servicing and upkeep costs for the duration. The downside is it may be more expensive at the end of the day.
If you are thinking about boiler finance Warm can help. Simply contact our team or fill in the quote form.