How To Offer Finance For Air Source Heat Pumps

What customer finance unlocks for your heat-pump business

Customer finance lets you sell the outcome customers want, not just the headline price. Instead of a heat pump being a single, large payment due upfront, finance turns it into predictable monthly costs that can sit comfortably alongside household bills. For air source heat pumps, this matters because government support reduces the amount a customer actually needs to borrow, making finance feel more achievable and more rational. When you offer finance at the point of sale, you also remove the friction of customers shopping around for loans, delaying decisions, or abandoning a quote.

Standout idea: finance is often the difference between “we will think about it” and “let’s book the survey”.

Why homeowners reach for finance in this market

Even with strong demand for cleaner heating, most households still make decisions based on cashflow. The Boiler Upgrade Scheme can contribute up to £7,500 towards an eligible air source or ground source heat pump in England and Wales, and the grant is typically applied by the installer and deducted from the invoice, which immediately lowers the balance the customer needs to cover. Add in 0% VAT on the supply and installation of qualifying energy-saving materials until at least 2027, and the net cost can fall sharply, but it is rarely zero. Finance bridges that remaining gap, while giving customers a fixed plan they can budget around.

How offering finance lifts conversions and order values

Offering finance can increase sales by improving affordability, protecting margin, and reducing drop-off between quote and install. When customers can see a monthly figure based on the post-grant, post-VAT balance, the decision becomes less emotional and more like any other household subscription. It also helps you present optional upgrades such as smart controls, cylinder changes, or minor electrical works as part of the same plan, rather than a series of painful add-ons. In practice, well-placed finance messaging can shorten sales cycles, raise acceptance rates, and reduce the number of customers who disappear to “get a few more quotes”.

Typical transaction values (what customers really pay)

What you can put on finance (beyond the outdoor unit)

1. Air source heat pump supply and installation

2. Heat pump cylinder and associated plumbing works

3. Smart controls, zoning, and thermostats

4. Radiator upgrades and balancing

5. Electrical upgrades required for installation

6. Commissioning, testing, and handover

7. Optional add-ons such as solar PV or battery storage (where offered)

FCA and compliance: what to get right

If you are introducing customers to finance, you need to understand your role and operate within the correct regulatory permissions. Customer communications must be clear, fair and not misleading, especially around APR, term length, eligibility, and any representative examples. You should avoid implying guaranteed acceptance, and ensure customers are signposted to pre-contract information before they commit. Advertising rules apply to websites, brochures, and even quote emails, so it is worth setting compliant templates early and training staff on what they can and cannot say.

Introducer and broker models, explained simply

In an introducer model, you present finance as a payment option and introduce the customer to a lender or broker, who then handles the application, underwriting and regulated steps. This can be a strong fit for heat-pump businesses because your team stays focused on surveys, design and installation rather than credit decisioning. A broker model can also widen customer choice, offering different structures such as low-rate loans, short-term 0% options (subject to eligibility), or longer terms that reduce monthly cost. Many propositions now mirror what customers see from major energy brands: little or no upfront payment, repayment by Direct Debit, and finance aligned to the point the system is installed and running.

What a good customer journey looks like (step by step)

1. Set expectations early: mention that finance can be based on the net cost after any eligible grant and VAT treatment.

2. Quote clearly: show the headline price, the grant deduction where applicable, and the remaining customer balance.

3. Present payment options: offer a small set of sensible choices (for example, short term, mid term, long term) with representative monthly payments.

4. Confirm eligibility basics: explain that finance is subject to status, affordability checks and lender criteria.

5. Customer applies: the application is completed digitally, usually with a quick decision.

6. Agreement issued: the customer receives the pre-contract information and the regulated agreement to review.

7. Installation booked: align installation dates and any staged payments to the finance process.

8. System installed and signed off: ensure documentation is complete and handover is recorded.

9. Payments begin: Direct Debit starts in line with the agreement terms, often once the system is installed.

10. Aftercare and referrals: follow up at 30 days to reduce cancellations and generate reviews.

Getting started with Kandoo

Kandoo is a UK-based retail finance broker, helping businesses offer customer finance in a way that is straightforward for your team and familiar for your customers. The aim is simple: make your heat-pump quote easier to say yes to, without diluting trust. Once your finance option is in place, you can embed it across your site, your quote templates and your sales calls, so customers understand from day one that they are likely financing a reduced balance after available support. You can also use finance to compete with household-name propositions by presenting clear APR-led options and a clean digital application flow.

Next steps you can take this week

• Add a “from £X per month” line to your quote emails based on the typical post-grant balance.

• Update your website FAQs to explain how the grant is deducted before finance is calculated.

• Train your sales team to talk about monthly affordability first, then system specification.

FAQs

Can customers finance the cost after the Boiler Upgrade Scheme grant?

Yes. In most cases the grant is deducted from the invoice by the installer, and customers finance the remaining balance, which is often far smaller than the headline system price.

Does 0% VAT reduce the amount a customer needs to borrow?

It can. With VAT at 0% on qualifying energy-saving materials and installation until at least 2027, the headline cost can be lower, which reduces the balance to finance.

What are typical post-grant numbers for an air source heat pump?

A commonly cited example is an air source heat pump priced at £11,499 with a £7,500 grant, leaving £3,999 for the customer to pay or finance, subject to eligibility.

Are there competitive APR benchmarks in the UK market?

Yes. Some providers advertise representative rates from around 5.9% APR with terms such as 5 or 10 years, and others offer around 6.9% APR over 5 years for a typical post-grant credit amount. Options vary by lender and customer profile.

Is 0% APR heat pump finance available?

Some energy providers offer 0% APR payment plans for shorter terms, such as up to 2 years, subject to credit checks and eligibility. This can suit customers who want to avoid interest and repay faster.

Can we offer “no deposit” or “no money down” finance?

Often, yes, depending on the lender and product. Zero-upfront structures are increasingly popular because they remove the biggest barrier: paying a large sum before installation.

What about air-to-air heat pumps and cooling?

From November 2025, the Boiler Upgrade Scheme is expected to include a £2,500 grant for air-to-air systems in England and Wales. Because these can be lower-cost installations, finance can translate into very small monthly payments.

Do we need FCA authorisation to offer finance?

It depends on your exact role. Many installers operate as introducers under an appropriate arrangement, while the regulated activity is handled by a broker or lender. You should take advice and ensure your process, training and marketing materials are compliant.

How should we explain finance without overwhelming customers?

Lead with the net balance after support, offer two or three clear monthly options, and be explicit that finance is subject to status. Customers want clarity on total cost, term, and what happens next.