I Owe $62,000 On A Leased HVAC System

Summary of I Owe $62,000 On A Leased HVAC System

by Ramsey Network

8m•November 13, 2025
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Overview of I Owe $62,000 On A Leased HVAC System (Ramsey Network)

A caller has paid off all other debts but is stuck in a leased HVAC (heating & air) contract whose total payments over 10 years exceed $62,000. After paying $15,000, the caller’s current buyout/remaining balance is about $47,000. The host (Dave Ramsey) explains leasing mechanics, warns about how expensive leases can be, and gives specific next steps and strategic financial guidance—placing the lease in the mortgage-payoff phase (Baby Step 6) because of its size relative to the caller’s income.

Key takeaways

  • Leasing equipment (including HVAC) can be extremely costly and sometimes predatory; it’s legal but often financially inefficient.
  • Investigate the contract’s early-buyout provision — many leases have buyout discounts that reduce the remaining balance if paid in a lump sum.
  • If the lease/liens on the house amount to more than half your annual income, treat it like a second mortgage and address it during Baby Step 6 (the mortgage payoff step).
  • Do not refinance your mortgage to pay it off if your mortgage rate is very low (example given: 2.25%).
  • Effective cost-of-capital for many leases often falls in the mid-teens (14–17%) even though leases don’t show APRs like loans do.

Details & context

What the caller described

  • Leased HVAC system; total cost over 10 years would exceed $62,000.
  • Caller already paid $15,000; buyout/remaining balance ≈ $47,000.
  • Caller is a retired federal employee with roughly $2,400 monthly income (implied).
  • Caller had health issues (cancer) which interfered with addressing the contract sooner.
  • They checked with the Attorney General and BBB; AG said the practice is legal.

Host’s analysis & recommendations

  • Re-check the contract for an early-buyout clause. Many leases allow an early payoff discount because the lessor receives their capital sooner.
  • Instead of accelerating payments via the debt snowball, save the payoff amount in a separate account and pay one lump-sum if a buyout discount exists.
  • Because this lease is effectively a lien on the home and the remaining balance is more than half the caller’s annual income, move this to Baby Step 6 and pay it when you’re paying off the house.
  • Do not refinance the mortgage to remove the lease if your current mortgage rate is very low (example used: 2.25%).
  • If the mortgage rate were higher, refinancing to remove the lease could be considered.

On leases in general

  • Leases (cars, equipment) are often the most expensive way to finance — the “cost of capital” is frequently between 14–17%.
  • Leases don’t disclose APR the way loans do, so consumers often don’t realize how costly they are unless they run the numbers.
  • Closed-end leases can have a large disparity between MSRP-based residual buyout and monthly payments, leading to a high effective interest rate.

Actionable steps (recommended)

  1. Re-read the HVAC lease contract carefully and locate the early buyout/termination clause.
  2. Consult the attorney the caller mentioned to confirm the legal/contract terms and to find any leverage (buyout formula, penalties, misrepresentations).
  3. Ask the lessor directly what the early payoff amount would be and whether there’s a discount for lump-sum payoff; get that figure in writing.
  4. If a discount exists, save the buyout amount in a separate savings account and pay in one lump sum (don’t double-pay monthly installments).
  5. If no buyout discount exists, treat the lease as a mortgage-equivalent lien and include it in Baby Step 6 (pay off while tackling your home mortgage).
  6. If you have concerns about predatory sales (especially targeting military/federal personnel), document and consider reporting to consumer protection authorities and the BBB.

Notable quotes

  • “I didn't know you could do a lease on a heat and air system.”
  • “This is thievery… they’re scum.” (Host on predatory leasing practices)
  • “When a home equity loan or a second mortgage of any kind is more than half your annual income, we move it to Baby Step 6.”

Final notes

  • Leases can be legal but still financially harmful; always compare total cost vs. purchase financing and check fine print for buyout options.
  • If you’re in this situation: document everything, confirm contract language with an attorney, and use the strategic plan above to minimize total cost.