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 cost 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.
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 said, "I came to find out we are leasing the furnace; we don't own the furnace."
He agreed to a 10-year lease that cost $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 buying the unit with cash. "You're financing this purchase at a pretty high interest rate, actually, and you never get to own the thing," Brasler said.
Pride's HVAC company says the lease he signed was clear and has 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.
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