Updated November 13, 2026
Quick answer
As of November 2026, most HVAC companies that “offer financing” refer customers to a third-party consumer lender, which pays the contractor and carries the risk. True in-house financing makes you the lender: a creditor under Truth in Lending once you extend credit more than 25 times a year, and the cash for every system stays tied up. Four $12,000 notes a month is about $534,000 out after one year. Axiant Partners, a business-loan broker in Boca Raton, funds the contractor side. Typical, not legal advice.
Two Ways to Offer HVAC Financing
| Third-party program | True in-house notes | |
|---|---|---|
| Who lends | A consumer finance company | Your company |
| When you are paid | Typically days after the job, less any plan fee | Monthly, over the note's term |
| Who carries default risk | The lender, under its program terms | You |
| Compliance work | Mostly the lender's; you follow its sales rules | Yours: disclosures, contracts, collections |
| Capital needed | Little | The full price of every financed system |
| What you control | Little: the lender approves the customer | Rate, term and who gets approved |
“Promotional” plans such as no interest for a period are usually paid for by the contractor through a fee taken from the funding. Ask each program for its fee schedule by plan in writing and price it into the job, the way you would a card fee.
The Rules That Apply When You Carry the Note
Offering consumer credit puts consumer-credit rules on your contracts. A summary, not legal advice; have a Florida attorney review your paperwork before the first note.
- Truth in Lending (Regulation Z). You are a creditor if you regularly extend consumer credit that carries a finance charge or is payable in more than four installments. “Regularly” means more than 25 times in the prior or current calendar year, or more than 5 if the credit is secured by the home (12 CFR 1026.2(a)(17)). Creditors give APR and finance-charge disclosures.
- FTC Holder Rule. A consumer credit contract you take, or a purchase money loan you accept as payment, must carry the notice that lets the buyer raise claims against whoever holds the contract (16 CFR 433.2). It matters if you later sell your notes.
- FTC Cooling-Off Rule. A sale of $25 or more made at the buyer’s home generally carries a three-day right to cancel. Repairs the homeowner called you out for, and true emergencies with a signed waiver, are excluded (16 CFR 429.0). A replacement system sold on a maintenance visit may not be.
- Florida. Installment contracts for home improvements fall under the Home Improvement Sales and Finance Act, Fla. Stat. 520.60-520.98: contract form, disclosures, finance charge limits and cancellation. The act licenses home improvement finance sellers (520.63), but 520.68 exempts licensed trades working within their license, and names installing central heating and air-conditioning as within it. Confirm how the rest of the act applies to your contracts.
Worked Example: What a Year of In-House Notes Ties Up
Illustrative assumptions, not a quote. A contractor finances four $12,000 replacement systems a month for customers at 9.99% over 60 months, and funds them from a business line of credit at an assumed 11%. Computed by script.
| Item | Amount |
|---|---|
| Customer payment per system | About $254.91 a month |
| Interest the customer pays over 60 months | About $3,294 per system |
| Notes outstanding after 12 months (48 systems) | About $533,900 |
| Interest earned from customers in year one | About $29,700 |
| Line of credit interest in year one at 11% | About $32,700 |
Two lessons. First, the cash: after one year more than half a million dollars sits in customer notes instead of the bank. Second, the spread: charging customers less than your own cost of funds loses money before a single customer stops paying. In-house programs that work price the note above the contractor’s funding cost and budget for defaults and collections.
How Contractors Fund the Program
- A business line of credit, commonly about 8-13% APR at banks, carries notes until they pay down. See business line of credit.
- Selling the notes to a finance company that buys consumer paper, usually at a discount. Holder Rule notices travel with them.
- A hybrid: third-party financing for most customers and in-house notes only for those the program declines, which keeps the book small.
- For the business itself, separate from customer financing: service vans, parts inventory and slow-season cash flow.
How to Set It Up, Step by Step
- Decide the model: third-party, in-house or hybrid. Most shops start third-party.
- Compare two or three programs on approval rates in your market, plan fees, funding speed and how they handle declines.
- If carrying notes, have counsel draft the contract, disclosures and cancellation notice, and set an approval standard you apply to everyone.
- Line up the funding before the first note, sized to a year of volume, and decide when you would sell paper.
- Train the sales team on what they may say about payments, and keep the financing offer separate from the equipment price.
To size and fund the contractor side, get matched with lenders or start from HVAC business financing.
Frequently Asked Questions
How do HVAC companies offer financing to customers?
Most refer customers to a third-party consumer finance program, which approves the homeowner, pays the contractor and carries the risk. A smaller number carry the notes themselves, which makes them the lender.
Do I need a license to offer in-house HVAC financing in Florida?
Florida licenses home improvement finance sellers under Fla. Stat. 520.63, but 520.68 exempts licensed trades working within their license, including central heating and air-conditioning installation. The rest of the act's contract rules may still apply, so confirm with a Florida attorney.
Does Truth in Lending apply to an HVAC contractor's financing?
If you regularly extend consumer credit with a finance charge or more than four installments, yes. Regularly means more than 25 times a year, or more than 5 if secured by the home, under 12 CFR 1026.2(a)(17).
How much cash does in-house financing tie up?
The full price of each financed system, paid back over the term. In the example on this page, four $12,000 notes a month leaves about $534,000 outstanding after one year.
Who pays for 0% financing offers on HVAC systems?
Usually the contractor, through a fee the finance program deducts from the funding. Ask for the fee schedule by plan and price it into the job.
Can an HVAC company get a business loan to fund customer financing?
Yes. A business line of credit is the common tool for carrying notes, and some contractors sell notes to a finance company. Price customer notes above your own cost of funds.
Sources & Further Reading
- 12 CFR 1026.2: Regulation Z definitions — Who counts as a creditor under the Truth in Lending Act, including the 25-transaction test.
- 16 CFR 433.2: FTC Holder Rule — The notice consumer credit contracts must carry when a seller finances or arranges financing.
- 16 CFR 429.0: FTC Cooling-Off Rule definitions — When an in-home sale carries a three-day right to cancel, and the repair exclusions.
- Florida Statutes 520.60-520.98: Home Improvement Sales and Finance — Florida's rules for financed home improvement contracts, licensing (520.63) and exemptions (520.68).
Figures above describe ranges commonly seen across lenders and reflect published guidance as of the date on this page. Confirm current terms with the cited source or your lender before acting.