Whether you’re buying a new water heater or are facing an emergency repair because your old heating system decided to stop working suddenly, the cost associated with a water heater replacement can be expensive. And that’s why it’s a good idea to consider hot water heater financing. 

Paying for the home improvement project can be made manageable through set monthly installments that fit within your budget! So, which water heater financing should you choose? Well, select a water heater finance solution that offers you favorable interest rates, the required loan amount, attractive loan terms, and an easy loan application process. This guide will help you understand all about hot water heater financing and the best loans available. 

Can you finance a hot water heater?

Yes. you can and you should. There are several ways to finance hot water heaters, including a personal loan or using a credit card. Unless you have a substantial amount of cash saved, you can choose the best loan option. After all, a water heater is an essential home appliance. It typically lasts 10 to 15 years — providing you the convenience and comfort of running hot water any time you want.

Therefore, installing a new heating system or replacing an old one should be on top of your home improvement list. Having a functional hot water heater is important for keeping your daily routine organized and convenient.

What is the average cost of a new hot water heater?

Installing a tank hot water heater costs anything between $805 and $1,560 — with the average cost being $1,170. This amount includes the cost of the heating unit and labor cost. 

Tankless water heaters cost more — about $1,000 to $3,000. While the water heater unit costs $300 to $2,000+, the plumber’s labor cost is $45 to $150 per hour. The time taken for a water heater installation averages from 2 to 3 hours. Keep in mind that a tankless heating system is more difficult to install and service.

For first time homeowners, here’s a little info — tankless heaters, also known as instant heaters, only heat water as and when required. Therefore, they are more energy-efficient. Such heaters tend to be much more expensive than tank heaters. 

Tank hot water heaters, on the other hand, have a reserve of hot water. And that’s why are able to provide hot water more quickly than tankless ones. While they are much cheaper to install and maintain, their running costs tend to be very high.  

Read more: A Comprehensive water heater installation cost guide

Tank & tankless hot water heater financing

Whether you want to opt for a hot water tank financing or a tankless water heater financing depends on your requirements. For example, a tankless heater isn’t the perfect choice for bigger families. Furthermore, if you want to use the heated water for different tasks at the same time like washing dishes and doing the laundry — a tank heater will be a better choice.

Therefore, when it comes to deciding which type of water heater is best for you, you will need to consider several factors. These would include how much water you plan to use, your lifestyle, family size, and your home remodeling budget. If you can get financing for a tankless water heater, it could save you money in the long run. Such heaters are more energy-efficient and give you good energy savings over the years.

A traditional tank water heater is best for those on a tight budget. Hot water financing will help you with easy and affordable loan options with which to replace your heating device. 

Read more: HVAC financing for good & bad credit

What are the signs of a bad hot water heater?

If you’re looking for signs that your water heater needs replacing, here they are:

  • There’s not enough supply of hot water.
  • Water temperature issues with heating. 
  • A leaking water heater
  • Weird crackling sounds from the water heater.
  • Getting smelly or discolored water. 
  • A really old water heater that constantly requires repair work.

How often should you replace your water heater?

Generally, most water heaters work well for 10 to 15 years. So, if your water heater has already worked beyond its expected lifespan, maybe you shouldn’t wait for it to start leaking or completely break down. You can get the most favorable water heater loan and replace the old system at the earliest. 

Planning a water heater replacement? Try Kukun’s free water heater installation cost estimator for quick results!

Pros and cons of hot water heater financing

There are several advantages of hot water heater financing. Once you qualify for an affordable financing program, you can go ahead with your heater replacement — on schedule and in your budget. 

The best home improvement loans (whether personal loans, home equity loans, or home equity line of credit (HELOC), will give you the purchasing power and the convenience of paying for the expensive home improvement over time through favorable interest rates and convenient monthly payments. Of course, your loan approval, the set interest rates, and the loan amount you’re eligible for will be subject to your credit score, credit report, and employment history. 

The only drawback of financing vis-a-vis paying through cash upfront is repaying the debt amount. You need to have a certain level of discipline to make sure that your payments are on time, every time. 

Making payments can be a bit stressful and may put a financial strain on you, especially if you’re already experiencing cash flow difficulties. The bottom line is, if you default on your repayments, it can adversely affect your credit score and credit rating. Something that no homeowner wants.  

Can you get hot water heater financing with bad credit?

Hot water heater financing with bad credit is possible, but it does come with higher interest rates. For those with a bad credit score, an unsecured personal loan is the best choice. 

Personal loans are especially great for those who do not want to tap into their home equity or don’t want to max out a credit card. This type of loan provides you with a fixed amount of money — usually over a loan term of two to seven years. 

The annual percentage rates aka APR range for personal loans range from about 6% to 36% — depending on your credit profile to a large extent. Though the loan has higher interest rates than home equity loans, they are easier to get. 

There are a number of financing companies such as Kukun that provide financing not just for water heater installations but also for a variety of home maintenance or home improvement needs. 

All you have to do is apply online and within a short time, you will get multiple personalized personal loan offers. With Kukun financing solutions,  you can explore the best loan options that are available. You can obtain the loan or financing options at no cost, with no obligation, and with no impact on your credit score.

However, do keep in mind that you cannot claim a tax deduction on the interest you pay on personal loans.

Want to apply for hot water heater financing?

If you’ve decided to finance your water heater replacement or installation, you can then do your research and choose the most suitable payment option. 

Looking for a home renovation loan? Kukun offers some easy loan options.

Here’s how Kukun makes financing water heaters easy and manageable:

  • A simple loan application process.
  • Multiple loan lenders or partners.
  • A list of the best loan options available.
  • Instant approval of special financing with quick credit decisions.
  • No hidden contractor fees, credit cards, or prepayment penalties. 
  • Convenient monthly payments.
  • Competitive interest rates.

Cost of running a water heater for a month

Water heaters are among the highest energy-consuming appliances in any household. But just how much does it cost to run a water heater for a month? The actual cost depends on the type of water heater you have in your home. Let’s break it down for you.

Electric water heater

There are a number of variables used to calculate the amount of energy your electric hot water heater consumes, including how old it is, the size of the unit, whether it is an on-demand model or a tank model, the temperature it is set to, and the amount of hot water used in a day, among other things. 

There is a formula used to calculate a cost estimate of the energy being consumed by your water heater. Multiply the number of watts your water heater uses by the amount you pay per kilowatt-hour, by the number of hours your heater stays on in a day, and divide that by 1000. Typically, a tank water heater stays on for about three to five hours a day. So a 4000-watt water heater that stays on for three hours a day, at a rate of $0.10 per kWh will cost you around $36.50 a month, or $438 a year.

Tankless electric water heaters are 24% to 34% more efficient than those with tanks in homes that use up to 41 gallons of water per day, and 8% to 16% more efficient if your daily usage is as much as 86 gallons per day.

Gas water heater

Most of the variables and the formula to calculate the energy usage of your gas water heater are the same as with electric water heaters. Multiply the number of hours your water heater is used by the number of therms consumed by the cost per therm and divide it by 1000.

Let us, for example, assume you pay a dollar per therm, and that your gas heater uses .205 therms an hour for three hours a day. That would make your monthly energy cost to heat water $18.70, or $224 a year.

Remember, the higher the Energy Factor rating on your water heater, the more efficient it will be.

Is it better to rent or buy a water heater?

Financially, it makes more sense to buy a water heater as opposed to renting one. When you rent a water heater, the fine print on your rental agreement in most cases will have a clause for an increase in the rental rates. The average rate at which these rates increase yearly is pegged at around 3.5%. That means if you rent your water heater for 15 years, the average lifespan of such appliances, you’re looking at an increase of almost 52.5% by the end of that time period.

On the other hand, even if you buy your water heater on a buy now, pay later scheme, your payment rates will never go up. Plus, once you’ve paid for the heater in full, there are no more payments to be made.

Buying a water heater also gives you the added benefits of a warranty as well as a maintenance and protection plan. These plans will take care of monthly inspections and maintenance, flushing contaminants and sediment from the tank as well as checking on the heath of the thermostat.

On the other hand, you are likely to get assistance only when problems crop up with rented water heaters.

Overall, it is safe to say that buying a water heater is a better choice than renting one.

How long does a tankless water heater take to pay for itself?

While tankless water heaters may be more expensive than their tank counterparts, they’re well worth the investment. They are a lot more energy-efficient, and more durable to boot. As an additional bonus, you can qualify for federal tax credits when you invest in one of these.

Tankless water heaters do pay for themselves with savings in energy bills, but it will take some time. While a tankless gas water heater may take around 22 years to pay for itself, an electric tankless water heater will take between 12 to 20 years.

Hot Water Heater Financing For Good & Bad Credit was last modified: February 16th, 2021 by Ramona Sinha