Boilers on Finance & Other Ways to Pay | A Buyer's Guide

Quick guide summary

What are my options for paying for a new boiler?

There are lots of ways you can pay for your new boiler. Cash upfront, credit card, spread the cost monthly with a finance deal or schemes to ‘rent a boiler’. We consider all the ways to pay for a new boiler, whether they represent good value or not and the advantages and disadvantages of each. If you want to pay monthly then you will need to use an installer that offers finance. (NB If you need heating companies that offer finance, you can find them on our Installer Network. Or get an estimate of installation cost first with our Boiler Quote Calculator tool.)

Overview of ways to pay for a new boiler

There are many different ways to pay

Cash, finance, credit card. Interest free deals help spread the cost for 1-2 years at no extra cost and interest baring deals can over 3-10 years, but you have to find an installer that offers finance.

Who offers finance and how competitive are their interest rates

We were surprised to learn that local heating companies offer better finance rates than national and regional providers - see our table below. Search our installer network to find one near you.

What are 'Rent a boiler' schemes?

Pay a single monthly payment that covers the cost of installation, servicing and maintenance. They charge interest. We compare like for like costs over 12 years to see if they are good value.

How to use this Guide

Explore the ways to pay for your new boiler

Find the best deals

We break down ‘rent a boiler’ schemes

Explore ways to pay for your new boiler

‘Cash’ (but more likely BACS, debit card or cheque)

Most companies will take a deposit and the balance on completion. You can pay by debit card or direct into their back account by BACS. Very few companies take a cheque now or cash, unless they are trying to avoid the VAT.

Advantages of paying upfront

  • No interest costs
  • You can use a sole trader if you wish

Disadvantages

  • The full amount is payable at the beginning

Interest Free

Interest Free represents an opportunity to spread the cost of a boiler, at no extra cost, but you will need a good credit rating. Companies must offer interest free customers the same prices as ‘cash’ customers. When a company targets ‘finance customers’ for their core business, their prices are likely to be higher across the board. As you will see from our finance provider comparison below, you will likely get a better deal from a local installation company that offers finance.

Advantages of interest free deals

  • No interest costs
  • Lower upfront cost – usually around 25% deposit

Disadvantages of interest free deals

  • You must use an FCA registered heating company, which restricts your installer options
  • Not available if you don’t have a good credit rating
  • Repayment period tends to be capped at 2 years, so monthly payments are higher than interest bearing deals

Interest bearing

Interest bearing means you will pay an interest rate on top of the loan. Most interest bearing deals are over 3-10 years and require £0 deposit.

Advantages of interest baring finance

  • £0 upfront cost
  • You can spread the costs for longer, which means lower monthly figures

Disadvantages of interest baring finance

  • You must use an FCA registered heating company, which restricts your installer options
  • Not available if you don’t have a good credit rating
  • You will pay an addition sum over and above the cost of the installation.

Buy now, Pay Later

Some finance facilities will allow a deferred payment period, of usually 12 months, which means you have nothing to pay until 12 months after you sign up for finance. Often, if you pay the loan off in the first 12 months then it will be interest free. If you do not pay it off and let it roll into interest bearing period, then the interest will be back dated to the start of the loan period and spread over the repayment period. The interest rate will also be higher.

Advantages of Buy now, pay later

  • £0 upfront cost
  • Often interest free if paid off in the first 12 months
  • You can spread the costs for longer which means lower monthly repayment amounts

Disadvantages of buy now, pay later

  • You must use an FCA registered heating company, which restricts your installer options
  • Not available if you don’t have a good credit rating
  • If you do not pay off in the first 12 months then interest is back dated and spread over the lifetime of the loan
  • You will pay back a much larger sum than any of the other options if you do not pay off in the first 12 months.

Credit card

It is possible to pay for your new boiler on a credit card, which is good value if it is 0%. There is always a charge for new purchases on a 0% credit card and payback periods tend to be 12-18 months.

Advantages of interest baring finance

  • £0 upfront cost
  • Interest free if paid off in 12-18 months
  • You don’t have to use an FCA registered company, but you will need an installer that takes a credit card

Disadvantages

  • If you do not pay off in the 0% period the interest rate will be much higher than any of the interest baring finance options
  • You will incur a charge for new purchases or transferring the balance

We compare finance deals from different heating companies

A quick on-line comparison shows that you’ll get a better finance deal from a local heating company.

Finance deal comparison
Provider APR Repayment Period
British Gas 14.9% 3-10 years
Local independent heating compaines on our network 9.9% 3-10 years
Swale Heating 14.9% 3-10 years
Help-Link 12.2% 3-10 years

We compare ‘rent boiler’ schemes with other ways to pay

‘Rent a boiler’ schemes are another way to spread the cost of a new boiler installation. They require no upfront cost, but take up to 12 years to pay back. The boiler is yours at the end of the period.

To compare like for like, we have taken a closer look at the 12 year cost of installing and maintaining a boiler in all payment scenarios to see if renting a boiler is good value.

We have assumed the boiler installed comes with a 10 year warranty, so there are no maintenance costs on the boiler other than the annual service. The rent a boiler schemes also provide cover for the rest of the heating system, so we have factored in a ‘top-up’ maintenance cover policy from any mainstream boiler cover provider. We have then allowed for two years of full boiler and heating cover once the manufacturer’s boiler cover expires after year 10.

Even with all the other maintenance costs factored it, the rent a boiler scheme works out near £450 more expensive than a 10 year finance deal at 9.9%. The rent boiler scheme is essentially the same as financing your boiler for 12 years and including all boiler cover costs. It’s not terrible, but it’s not better value than financing your boiler for the longest period offered by most local heating companies.

We compare ‘rent boiler’ schemes with other ways to pay
Ways to pay for your new boiler Cash Interest free over 2 years with 25% deposit 9.9% APR over 5 years with £0 deposit 9.9% APR over 10 years with £0 deposit Rent a boiler - 12 years with £0 deposit
1) Boiler installation cost with 10 year boiler manufacturer guarantee £ 3,000.00 £ 3,000.00 £ 3,000.00 £ 3,000.00 £ 3,000.00
2) Finance interest £ - £ - £ 815.62 £ 1,737.51 £ 1,965.00
3) Monthly payments £ - £ 93.75 63.59 39.48 £39.99 increasing to £55 over 12 years*
4) Annual service costs (required for extended warranty) over 10 years £ 700.00 £ 700.00 £ 700.00 £ 700.00 Included
5) Heating system 'top up' cover over 10 years £ 700.00 £ 700.00 £ 700.00 £ 700.00 Included
6) Full boiler and system cover for last two years £ 440.00 £ 440.00 £ 440.00 £ 440.00 Included
7) Total maintenance costs over 12 years £ 1,840.00 £ 1,840.00 £ 1,840.00 £ 1,840.00 Included
8) Cost of installation + finance + 12 years of servicing and maintenance £ 4,840.00 £ 4,840.00 £ 5,655.62 £ 6,577.51 £6805*
9) Upfront cost £ 3,000.00 £ 750.00 £ - £ - £ -

Figures taken from http://www.thisismoney.co.uk/money/bills/article-3491671/Is-cheaper-rent...

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