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Boilers on finance & other ways to pay - flexible payment plans

26/03/2019

Jo Alsop

Heating Hero

The Heating Hub

How to pay for a new boiler... the market has changed a lot in 10 years and finance packages are common. We guide you on the pros and cons.

 

Who offers replacement boilers on finance? What are my other payment options?

There are lots of ways you can pay for your new boiler as well as finance: cash upfront, credit card or schemes to ‘rent a boiler’. In this guide we review ALL the ways to pay for a new boiler, whether they represent good value or not and the advantages and disadvantages of each. 

Typical finance packages

Many heating companies offer ways to spread the cost of a new boiler installation with finance. We provide you with some typical scenarios for interest free, buy now pay later and interest baring. NB these are common figures found in the industry and on our network, but you should check with your installer directly.

  Interest free 0% finance Buy now pay later Interest baring
Period 1-2 years

Defer 1 year

Repayment over 7 years

3-10 years
Interest rate 0%

0% if paid in first year,

17.9% APR over 84 months

9.9% APR
Deposit 25% 0% 0%

Repayment scenarios for £3,000 installation

  Interest free 0% finance Buy now pay later Interest baring
Amount £3,000 £3,000 £3,000
Repayment Period 24 months 84 months 120 months
Deposit £750 £0 £0
Monthly repayments £94 £64 £39
Total interest repaid £0

£0 if paid in first year,

£2,830 over 84 months

£1,737

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

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.

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.

 

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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
  • No consumer protection via a credit card

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

 

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