Whether you're looking to upgrade an existing system or suddenly find your HVAC system is broken, an all-in-one, energy-efficient heat pump could well make sense. Paying for a new system might not. Heat pump leases are a growing option for bringing affordability to your home HVAC needs.
A heat pump can provide year-round comfort and a lease could work better with your budget. We’ll discuss this in more detail in this guide.
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What Is a Heat Pump?
A heat pump is an electric appliance that moves heat from one area to another via a refrigerant, just like a refrigerator or air conditioner. But a heat pump can move heat into or out of a building to provide both heating and cooling. It’s a highly energy-efficient appliance because it transfers heat instead of generating it.
Heating and cooling with a heat pump system is more efficient than other heating and cooling systems. Heat pumps put out three to four times more energy as heat than they consume in electricity.
Compare that to the efficiency of an electric resistance heater (100%) or a highly efficient gas furnace (99%).
A new energy-efficient electric heat pump can save most homes on their electric bills, the Department of Energy found. With this efficiency gain, heat pump systems can provide significant savings when replacing fuel oil, propane, or non-heat pump electric heating.
New heat pump technology is also being used in other home appliances such as heat pump water heaters and dryers.
Credit US Department of Energy
What Is a Heat Pump Lease?
If you'd like a heat pump for your home but don’t want the upfront cost of buying, you may consider a lease. Prices for buying and installing a heat pump system depend on a variety of factors, like how large of a system you need, the severity of your local climate, and whether your home needs additional work before installation. Total cost can range from $3,000-$30,000.
Much like a car, solar panels, or an apartment, you can lease a new heat pump without the expense of purchasing it. You make predictable monthly payments and get the benefits of the heat pump, full service and maintenance coverage, and the comfort of year-round heating and cooling.
In a lease, you do not own the system; the leasing company does. However, some companies may offer you the option to buy the system or upgrade to the latest and greatest model after a number of years or at the end of the lease contract.
Pros and Cons of Leasing a Heat Pump
Leasing a heat pump has benefits and drawbacks. Here’s what to consider when deciding to lease.
Heat pump lease pros
- No upfront cost: There’s no upfront purchase or installation cost.
- No service, maintenance, or repair costs: Service, maintenance, and repairs are included in your monthly payments. It’s important to know the terms of a contract so you don’t accidentally break a service agreement.
- Predictable cost: A fixed monthly cost lets you budget in advance.
- Benefit from incentives: Most tax credits and other incentives go to the owner of the heat pump, in this case, the leasing company. They could pass along cost savings from tax credits, rebates, grants, or other incentive programs to its customers.
- Comfort: Your heat pump can keep you comfortable year-round.
Heat pump lease cons
- Long-term contract: You’ll be in a long-term contract which may be expensive to break.
- No direct benefit from some incentives: You won’t directly get tax credits, like the federal Residential Clean Energy Credit or Energy Efficient Home Improvement Credit, or rebates. You’ll have to rely on the leasing company passing savings on to you.
See how much you can save with home energy changes
Leasing vs Buying a Heat Pump
Whether you should lease or buy a heat pump depends on your specific circumstances.
Of course, your budget, credit status, and other fiscal considerations are key. So is whether you can benefit directly from tax credits or your current tax liability is too low to claim them yourself.
For some, the benefit of more efficient home heating and cooling without the major upfront expense is a big draw.
| Leasing | Purchase (no loan) | Loan purchase | |
|---|---|---|---|
| Initial cost | None | Full equipment and installation cost | Down payment |
| Monthly cost | Lease payment + electric bill | Electric bill | Loan payment + electric bill |
| Interest | No | No | Yes |
| Maintenance | Included | Your responsibility | Your responsibility |
| Tax credits/incentives | Owned and managed by leasing company | Potentially eligible | Potentially eligible |
Leasing a Heat Pump With Palmetto
When you lease a heat pump with LightReach, you’ll work with experienced professionals and top-rated customer service. You can get energy-efficient home heating and cooling for $0 down.
Our partners will assess your home, install your heat pump, and cover all maintenance, service, and repairs over the lease’s 10-year term. The value of system rebates and incentives is included in your total cost and helps to lower your monthly payment.
At or near the end of the lease term, you will have options, including renewing with reduced monthly rates, buying the system, or upgrading to a new, more efficient heat pump system.
To get in contact with Palmetto and learn more, start with our quick and free online quote tool.
See what home electrification can do for you:
Frequently Asked Questions
Will leasing a heat pump save me money?
Leasing a new energy-efficient heat pump can reduce your energy bills compared to your old system. Whether you’ll save or how much will depend on the system you’re replacing, your lease payments, your local energy prices, and your eligibility for incentives.
What does a heat pump typically cost?
Residential heat pumps vary widely in cost for the system and installation. Size of the home (or the area you’re heating and cooling), brand, energy efficiency, product availability, labor, and extra installation work (as in ducts or electric work) are some of the factors. Prices for heat pump systems plus installation range from $3,000-$30,000.
What are the benefits of a heat pump?
Heat pumps are highly energy efficient systems for home heating and cooling. Heat pump technology is also used for water heaters, dryers, dishwashers, and a growing number of appliances. You can save money, generate fewer greenhouse gases, and move toward home electrification, which might make even more sense if you are using home solar panels for renewable energy.
What are the downsides of a heat pump?
The upfront cost of the new system, including installation, can be significant. Some heat pumps may be less efficient in colder climates, although new cold-climate heat pumps are tested and certified to work in very cold temperatures.
Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.
Andrew GiermakWriter and EditorAndrew joined Palmetto in Charlotte in August 2024. He’s been a writer in journalism, then in business, going back to almost the 20th century. He’s lived in Indiana, Virginia, Pennsylvania, Virginia again, and now North Carolina for the last 12 years. He likes golf. Is he good at it? Not so much.
