If you think cell phone contracts are bad, they’re nothing compared to these.
Furnace rental has become the new option for Western Canadians. Many contractors are contemplating whether to jump on board.
Equipment rentals are the most lucrative revenue stream for Home Comfort companies, but a terrible option for homeowners and at some point, contractors, have to be able to look in the mirror.
These rental options are being offered untruthfully, either by willful ignorance or by cunning salesmen. Heck, the government had to step in and write new laws to prohibit the selling of these contracts door to door.
When all the details get disclosed, not twisted or omitted, very few homeowners choose this option.
Reason #1 Insane total cost over the long term.
The majority of furnace rental plans are “forever plans.” In Calgary, the initial contract term length averages seven years. After seven years you have four options.
- Carry on with the same contract & equipment for another 7-year term. This plan is designed to keep you paying a monthly fee for the rest of your life and even long after that. The idea is to get anyone who may purchase the house from you too. You will never own the equipment; these plans aren’t rent to own!
- Upgrade to newer equipment; the new contract must be a minimum of $1 more a month. Sounds great, if you think its necessary to upgrade hardware every seven years. Furnaces usually last on average 15 – 25 years. Also, your buy-out option now gets re-configured and re-calculated.
- Pay the buyout and own the equipment outright. The buyouts have two consequences. A) The buy-outs are ridiculous, downright outlandish. The buyout gets jacked, they make you pay for all the free services and products received during the rental. B) Your contract can be sold without your knowledge to another rental company, and all the money you paid lost. Now your buyout is even higher than the first mentioned consequence.
- Terminate the relationship & pay a fee to have all the equipment removed. The cost won’t be friendly, and you just paid for seven years, only to buy another furnace from another contractor.
Reason #2 Service costs covered but no choice.
The annual furnace servicing is included in the contract, but you have no choice in the provider. You’re trapped with that one company for the entirety of the agreement, regardless if your happy or not.
You should have a healthy relationship with your contractor but not married to them. Divorce is always very costly.
It’s unfortunate, but these contracts provide sub-par service, you’re locked in. They no longer need to impress; it’s their equipment and not yours. Constant cancelations and rescheduling is the norm and quick mediocre fixes standard.
Reason #3 Decreased home value.
The most shocking of them all, rental equipment deters potential home buyers, its proven to be a considerable negative during negotiations! Do the math, a furnace and air conditioning rental system add approx. $30,000 on a 25-year mortgage. NO THANKS!
Even crazier, furnace rental companies put a lien on your house without your knowledge. It’s a protection for themselves. It hurts credit scores and becomes very frustrating when re-mortgaging or attempting to get a second mortgage.
The main attraction to these furnace rental plans are the incentives offered upfront, they will do almost anything to get you under contract: the reason, incredible amounts of profit in the long run.
The trick is getting you to focus on attention-grabbing incentives/benefits, but they’re banking on long-term residual income.
One can finance a whole new system for ten years at 9% interest and pay less than a rental contract would cost. Many turn their noses up at such financing terms but happily accept the latter.
Knowledge is power! Quick online research produces numerous websites dedicated to exposing and voicing concern over the true nature of these schemes. Most are from Ontario, the birthplace of home comfort rental contracts.