There are several options available to you when looking for help to finance your boiler purchase. These include:
Personal loan. A personal loan is when you borrow a certain amount of money from a lender, and you pay this back over an agreed period of time by monthly instalments, with interest. You may wish to consider a loan to help afford your boiler as you receive the money upfront.
Boiler finance schemes. These schemes are offered in the UK by many energy providers and boiler manufacturers. You will be able to pay for your boiler over monthly instalments, with interest.
Credit cards. You might want to use a credit card to buy your boiler. If you do, you can pay it back over time but there will be a minimum you’ll have to pay each month. Consider using a 0% purchase card with an interest-free period. However, if you have a bad credit rating or no credit history, you may struggle to apply for a credit card or loan. If this is the case, you might want to enquire about a credit builder credit card which is designed for people with no or bad credit history. While the terms are less favourable, you will receive the same perks as a credit card.
The government boiler grant scheme. Not a loan, but a grant given to people on certain benefits. It’s definitely worth checking to see whether you qualify (see the link in “FAQs”, below). The government grant is part of an energy efficiency initiative to reduce carbon emissions, and will cover the cost of replacing your boiler – with nothing to pay back!
Key features of personal loans at a quick glance
Loan terms. The terms can include the loan duration as well as interest rates and repayment plans.
Loan amounts. The amount of money that you are allowed to borrow.
Get a personalised quote. This will give you an indication about the terms in which a provider will lend you money, and will have no bearing on your credit rating.
Price matching. Some providers offer a price guarantee to match or beat offers from other providers.
Monthly repayments. You will be able to repay your loan in monthly installments.
Repayment holidays. This is an agreed period with your lender, perhaps either one or two months, where you will not have to make repayments. However, interest will still build up.
Quick decisions. Providers will usually make a fast decision about whether they will lend you money or not.
Access to funds. You are able to get access to all the funds upfront.
Fees. You may incur extra costs, such as interest or late payment fees.
Perks. With some loans, there may be special benefits such as a 0% interest period.
Overpayments. If you wish to pay off your loan sooner than agreed, making overpayments is the way to do it. Most overpayments will not incur a penalty so long as you remain within the overpayment limit. It is important to check the small print of your loan before you make an overpayment.
Early repayment.For many loans, you will incur a penalty and additional costs if you repay your loan in full earlier than expected.
How should I compare different loans for boilers?
There are several important factors to consider when comparing loans. We’ve listed some of them below:
Loan amount.The amount of money that you can borrow will differ between lenders.
Interest rate. There are some loans available that are interest-free. If the loans you are considering are not interest-free, make sure you take the interest rate into consideration
Fees.You may be required to pay upfront or ongoing costs that will add to the cost of your loan.
Eligibility criteria. Whilst you may be eligible for some loans, you may not meet the criteria for others.
APR. The Annual Percentage Rate is designed to present consumers with an annual summary cost for the loan, including any setup fees and interest. Different loans will have different APRs, but it is important to remember that they are only representative, and your costs may be more expensive.
Loan terms. The length of the loan period, and other terms and conditions, may differ between providers.
Overall cost. As well as the loan amount, you should also take into consideration any start-up costs and any interest.
Early repayment. Although you may find yourself in a position to pay off your loan early, some loans charge extra costs if you repay your loan too early.
Am I eligible for a boiler personal loan?
You should only apply for a personal loan to finance your boiler if you are positive that you can meet the repayment terms, otherwise you will face additional costs and it may impact your credit rating.
To apply for a personal loan, you will need to meet the following criteria:
You are over the age of 18.
You will be no older than 70 when the loan term finishes.
You have been a UK resident for over 3 years.
You have a regular income above £12,000.
If you are self-employed, you have been so for over 2 years.
You must have a good credit rating, with no history of bankruptcy or County Court Judgement.
You hold a UK bank or building society account that is able to pay direct debits.
How can I apply for a loan?
If you have decided that a provider’s loan is right for you, simply fill in the application form for the loan via their website. You will need proof of the following:
Your address details for the past 3 years.
Your current income and employment details in the form of payslips and bank statements.
The bottom line
If your boiler has packed up and you can’t afford to replace it, don’t panic! There are quite a few options to restore your household to hot water. Whether you’re applying for a loan or a financial scheme, make sure you are aware of the risks and that you can commit yourself to monthly instalments until the loan amount is paid back.
There are several criteria that you will have to meet. They include, but are not limited to, being a homeowner or private tenant and have a boiler that is over 5 years old. You must also receive one of the following benefits: pension credit, child tax credit, income support, working tax credit or universal credit.
They are currently available in England, Scotland and Wales from boiler suppliers, manufacturers and most energy supply companies.
As with any loan, there are some downsides. You will end up paying back more than the cost of your boiler and installation due to interest, and if you miss a monthly payment it will affect your credit rating.
Yes. They do a credit check and give you a decision within minutes. If you’re credit rating is not good or you have no credit history, you may wish to consider a credit builder credit card.
Charlie Barton is a publisher at Finder. He specialises in banking and investments products, including banking apps, current accounts, share-dealing platforms and stocks and shares ISAs. Charlie has a first-class degree from the London School of Economics, and in his spare time enjoys long walks on the beach.
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