Spread the cost of a replacement boiler and the installation by taking out a boiler finance agreement.

A boiler is one the most expensive appliances in the home to replace, and it is believed that many homeowners struggle to find such a large amount of money upfront to pay for a new one. Thankfully, many companies, energy providers and boiler installers offer flexible finance options to enable people to spread the cost of a new boiler and the installation.

What is a Boiler Finance Agreement?

In a nutshell, a boiler finance agreement allows you to pay for your boiler replacement in monthly instalments. You’ll need to borrow the money from a lender, and the amount you can borrow will depend on the payment plan and your personal circumstances. Some lenders demand you pay a deposit as well. If approved for finance, you’ll have to pay for your boiler over a set number of years, which is usually somewhere between 2 and 10 years depending on how much money you can afford to pay each month. Boiler finance packages and interest rates differ from one company to the next, so it’s important to find an agreement that best suits you and your budget.

How Do I Apply for Boiler Finance?

You’ll need to purchase a boiler from a company that offers a repayment plan through a lender. The finance agreement will be arranged with the lender, rather than the company you actually purchase the boiler from. Take the boiler installation company Help-Link, for example. If you want to purchase a boiler from Help-Link and would rather pay for it in monthly instalments, you’ll need to apply to Help-Link’s lender, which is Shawbrook Bank.

In order to take out a boiler finance agreement, you must go through an approval stage and pass some credit checks. This basically involves providing the lender with some personal information so that they can review your financial situation and make sure you’ll be able to keep up with your monthly payments.

If it turns out that you’re eligible to purchase a boiler on finance, the lender will pay for the boiler and installation. Once your new boiler has been installed in your home, you’ll start making monthly repayments. Don’t forget, the contract is between you and the lender (not the boiler company), so you must pay back the set amount of money to the lender over the agreed period of time.

What if I Have a Bad Credit Score?

Some companies will allow you to get a boiler on finance if you have a bad credit history, but your choice of lender may be limited. Individuals who do not have a perfect credit history tend to apply for boiler finance through companies that perform what’s called a ‘soft credit check’ because this increases their chances of passing the approval process. If your credit rating is poor and you are approved for boiler finance, you’ll probably be offered a plan that requires you to make higher monthly repayments over a longer period. It’s advisable to check your credit score prior to attempting to purchase a boiler on finance so that you can see whether any potential issues can be rectified, as doing this can save you money on a finance plan.

Companies that Offer Boiler Finance Packages

When you start looking around, you’ll notice that many boiler installation companies and energy providers offer some type of boiler finance. You can also ask your bank or building society if they’d be happy to provide you with a loan to pay for a new boiler. Like we always say, it’s best to shop around to ensure you find the right finance plan for you.

Here is just a small selection of the companies that offer boiler finance to their customers:

• Help-Link
• BOXT
• British Gas
• ON
• Southern Electric

As there are many boiler finance packages available nowadays, you must do some research and check the conditions of each arrangement before signing up. Compare things like lender interest rates, deposits (if any), additional charges and the loan term in months.

Pros and Cons of Purchasing a Boiler on Finance

Taking on a boiler finance agreement certainly has its advantages, especially if you simply don’t have the money to pay for a new boiler and the installation upfront. However, spreading the cost won’t be the best option for everyone, so you need to weigh up the pros and cons to help you determine whether you should buy outright or take the finance route.

Boiler Finance Pros:

• You can replace your boiler, even if you can’t afford to right now
• The monthly payments can be spread over a number of years
• Flexible plans available to suit all budgets
• Access to an energy efficient boiler to help save money on energy bills

Boiler Finance Cons

• The overall cost will always be more than the upfront cost
• The longer the agreement, the more you’re likely to pay
• You’ll be committed to making monthly payments for several years
• Payments must still be made if you move home but haven’t finished paying back the lender
• You may be refused credit or have to pay back more if you have a poor credit rating

Whether or not you should apply for a boiler finance deal will most likely come down to your personal circumstances, but it’s important to remember that it works out cheaper to pay for the boiler and installation upfront (if you can). And don’t forget, free boiler grants are available, so be sure to check your eligibility before applying for boiler finance.