Best way to pay for this?

[disneysteve]

Edit: I shopped around and got the best price last time--and ended up having to hire someone else to finish what they didn't. I'm going with a company that I know does excellent work this time.

Price and quality of work are unrelated.

Get a few quotes. Avoid the companies that advertise everywhere, have TV and radio commercials and bus wraps and sponsor local sports teams. The customers are paying for all of that nonsense.

If you know anyone who works in the construction field or real estate, especially someone who rehabs homes, ask them for recommendations. They'll know the people who do good work at a fair price.

As for financing, you should be able to find 0% assuming your credit is okay. No way would I take a 7% loan from the utility company.

We replaced our furnace and AC last year. The big name brand company that advertises constantly wanted $13,000. The guy we used, recommended by a friend who rehabs homes for a living, charged us $7,000 and did a fantastic job. He was an old-fashioned tradesman, not a salesman.

[frugal saver]

Thank you everyone for your replies.

I've had all night to think about this and now I'm wondering if it really needs to be replaced right now.

I have a 980 sq. foot one-story house, an American Standard 3-ton heat/ac installed in about 2000. The system was turned off all day yesterday until the service person arrived. He checked everything, turned it back on--it worked fine at that point--and then then showed me a picture of something in the system with rust on it and started his sales pitch that I absolutely needed a new system and this one wouldn't last the week.

I'm going to talk to the company tomorrow (day 2 of my 3-day right-to-cancel period) to explain what is wrong with my system that it has to be replaced this week.

My last service was in June, and that technician (same company) said everything was fine but I needed to start saving up because he said I'd need to replace it in probably 3 to 5 years.

I hate that "don't know if I'm being taken advantage of" feeling.

[disneysteve]

I hate that "don't know if I'm being taken advantage of" feeling.

I am so with you on that. Dealing with contractors is the worst. But I think that's why it is so important to get multiple quotes. Stay away from the crazy high price. Stay away from the guy who is pressuring you to sign the paperwork on the spot. And, like I said, stay away from the big regional company that has ads everywhere you turn. Good, reliable, reasonably priced contractors don't do a ton of advertising. They depend on word of mouth referrals for the bulk of their business. Ask around to friends and neighbors and see if a name keeps popping up.

[TexasHusker]

Thank you everyone for your replies.

I've had all night to think about this and now I'm wondering if it really needs to be replaced right now.

I have a 980 sq. foot one-story house, an American Standard 3-ton heat/ac installed in about 2000. The system was turned off all day yesterday until the service person arrived. He checked everything, turned it back on--it worked fine at that point--and then then showed me a picture of something in the system with rust on it and started his sales pitch that I absolutely needed a new system and this one wouldn't last the week.

I'm going to talk to the company tomorrow (day 2 of my 3-day right-to-cancel period) to explain what is wrong with my system that it has to be replaced this week.

My last service was in June, and that technician (same company) said everything was fine but I needed to start saving up because he said I'd need to replace it in probably 3 to 5 years.

I hate that "don't know if I'm being taken advantage of" feeling.

If they are quoting you more than $5K for a 3-ton system they are ripping your head off. And on that note, a 3-ton system seems like overkill for 1000 sq ft. I have a 4 ton for my downstairs which is 2100 sq ft. I'm guessing you need a 2-ton.

[msomnipotent]

It depends on where he lives and the insulation in his home. It also depends on how efficient the unit is. I used an online calculator using my area (nothern IL) and 1,000 sq ft with basic insulation, and it recommended 2 ton if SEER 14 or above. OP probably has a less-efficient system and they are replacing it with a like-kind. It still doesn't explain why it is so expensive. I had a 15 SEER furnace for a 3,200 sq ft house installed for $5,800 and I was told later that I got ripped off.

[TexasHusker]

It depends on where he lives and the insulation in his home. It also depends on how efficient the unit is. I used an online calculator using my area (nothern IL) and 1,000 sq ft with basic insulation, and it recommended 2 ton if SEER 14 or above. OP probably has a less-efficient system and they are replacing it with a like-kind. It still doesn't explain why it is so expensive. I had a 15 SEER furnace for a 3,200 sq ft house installed for $5,800 and I was told later that I got ripped off.

I think you did just fine at $5800.

[msomnipotent]

I think you did just fine at $5800.

I got curious and pulled out the furnace info. I had the furnace confused with the A/C rating. I paid $5,800 for a 110,000 BTU furnace that is 95% efficient. The SEER rating applies to the A/C. I think I paid $3,000 for the A/C, and that installer told me I got ripped off on the furnace. He was a friend of my sisters so I don't think he would lie. All in all, I still paid less for both than what the OP is being charged and I have triple the space. I would do some more price checking if I was the OP.

[bjl584]

$10,000 for a HVAC system is way too much.
As others have suggested, get a few more quotes.

One thing that I definitely wouldn't do is finance through the utility company.
I also wouldn't pull money from a retirement account.
I'd be inclined to use a HELOC or a 0% credit card for this.

[greenskeeper]

sounds like you have a heat pump system. You should be able to get by in emergency heat (electric coil) until you decide what to do. It will be more expensive to run in the emergency heat mode however.

[snafu]

Furnace repair/replacement takes a bit of time for research, local contractor quotes and getting financing in place. Ask friends and colleagues to loan coil heaters! As mentioned, get/use electric heaters if your current re-start quits.

Use a CC with 'cash back' feature for percentage to be paid by savings and mandatory distribution IRA. Seek 0% CC availability for remaining sum. How much is the 'mandatory' distribution sum IRA inheritance? $ 3,000. savings in combination can get you through the emergency mode. I would leave $ 1,000. in savings. You will need to make unplanned cut backs to clear 0% CC within their time frame because subsequent interest goes into crazy!

In our home every discretionary dollar would be reviewed for temporary application to furnace emergency pay down. I suggest reviewing past 3 months spending categories to see which financial obligations must be paid and which can be reduced even a bit for the short term. Do you anticipate an income tax refund? How fast can you collect info/details needed and file?

Suddenly every mile driven has potential for cost avoidance. Errands and appointments must be combined with daily commute for example. Review Insurances, is valuation appropriate to KBB? Is deductible appropriate? Is there any eligible discount ? Use Gas Buddy [or similar site] for cheaper gas or discounts, in your area. We make it a point to 'top-off' gas before going home on 'discount' day. I made it a point to track the spending difference over 3 months last winter and I was the most surprised by small amount of attention.

Using meal planning, brown bagging lunch and being mindful of small spends in combination of asking 'is this spend really necessary' should get this real emergency covered quicker than you currently expect.

[Nutria]

I suggest reviewing past 3 months spending categories to see which financial obligations must be paid and which can be reduced even a bit for the short term.

This is when "categorized savings" (which I've recently mentioned in threads in other fora on this site) is useful: the review has already been done and you'd already have an Appliance fund, plus know what future expenses there will be in other categories. Thus, you can decide what other categories to pull from.

[cypher1]

I did the same as Jluke did in 2015 when my AC crapped out while testing in spring. Replaced the original furnace (heat exchange started to get cracks) and AC together for $5500 with Trane 0% financing for 15months, and just paid it off in full a few months ago.

My house is 2000sq ft, and was built in 1997. Went with a 2stage 97%AFUE, and AC is 13 SEER.

As others mentioned, definitely get other quotes, and go with someone who has been recommended for install. Besides the price, I would more concerned who the installer is, than the brand name (since a lot of these names are simply bought and re-branded). While it's still a business, installers do not like coming back for re-works/repairs.

My installer was recommended by two other friends. Who, coincidentally installed a lot of the same units in the same neighborhoods around me since the early 90s.

Some other questions to ask:
How long do you plan on staying at that location?
For example, I could have saved $1500 with a no name brand by the same installer. If I didn't see myself staying for another 2+ years, I would have gone with cheaper price.

How old is the AC unit? You may want to consider replacing both at the same time, if that unit is pretty old as well.

Do you have a rough size for BTUs heat your place, based on the heat climate? Very rough example, 1000sq ftx40 BTUs per sq ft(this could go up higher based on geography)= 40000 BTUs would required to heat the house. Now this could vary depending on climate and living standards/preference

Do you want a high efficiency model 95%+ AFUE?
Or would a single stage 80% suffice?

Besides price concern:
Is brand name a priority?
Is extended warranty a priority?

Overall, $10k for your replacement sounds ridiculous. Just an example of a service taking advantage of you at the worst possible time for season.

Keep in mind an furnace alone could cost between 900-2000, and then labor is the difference. Mark up can be amazing. I found out a friend had another HVAC friend do his replacements as well. He paid cost prices of 1800 for both units, and then only charged 400 for a days worth of work.

Research the price ranges for high efficiency vs single stage units. Since your place is around 1000 ft and fairly newer home, if you don't have high efficiency, that may be the way to go. Or it may not be necessary.

Or see if how much it would cost to get the repair done to get through the winter. Then start pricing/budgeting to replace before next winter of 2017. Timing is everything.

[frugal saver]

Thank you for the recent replies--lots of wonderful help and advice.

To answer a previous question--my house was built in 1955 and this hvac is the first ever central heat/air and is about 15 years old. And my mandatory IRA withdrawal is around $1500 a year--I normally use it to pay my property tax.

Update: I talked to the owner of the company today. He said the technician noted a whole list of problems with my system--none of which were even mentioned to me. The owner will be sending out a different technician tomorrow--that I know and like--for a second opinion. Plus my neighborhood group has recommended another local company for another opinion.

I've shifted some money around (in preparation for paying for this) and will have about $5000 in a local money market account (3% interest on the first $2000, then 2% interest on the remaining $3,000) so I'll be better prepared for next time.

[Fishindude77]

A pretty good rule of thumb for houses and offices is; one ton of air conditioning is required for every 400 square feet.

Unfortunately there are some people in the HVAC business that just don't know much, so they don't know how to repair your system. The easy solution for them is just to replace it. They may not necessarily be dishonest, it's just that they are inexperienced and don't know any better. Old time tradespeople are becoming scarce as hens teeth.

Ask friends or neighbors who they use, if they were happy with them, and then just hire that guy and keep going back to him if you are satisfied. Getting a bunch of quotes and shopping around for a low number won't do you any good, as you don't know what you are looking at to start with. It's a two way street, you need to trust somebody, let them make a fair profit, pay them promptly, etc. and develop a long term business relationship if you want good service and fair prices.

Good luck !

[TexasHusker]

Heat pumps suck. They tend to run all the time, and push lukewarm air through the vents. We had one at our last house, and just turned on Emergency Heat which fired up the ol' gas furnace, and left it that way for 10 years.

I would get a good gas furnace, a good A/C unit, and call it good.