Homeowners in Virginia and Washington, D.C. frequently ask us if there are financial advantages for paying cash or financing their replacement window project. While it seems reasonable to assume paying cash is always better than financing, it might surprise you to know there are some advantages to both payment options.
So, here are a few details from our replacement windows specialists at Renewal by Andersen of Virginia and Washington, DC to help you decide which is better for you.
Cash is Better – Or is it?
If your cash is sitting in a savings account earning a paltry 1 or 2 percent interest rate, paying cash might be best option for you. The average interest rate for accounts in Washington, D.C. (January 2014) is just 0.066. Virginia rates are only slightly higher at 0.1161. Home improvement and energy efficiency upgrade loan rates vary from just under 3% to 5%, depending on credit scores and where you live in the VA/DC area.
On the surface, this comparison looks like cash is definitely better than financing. But there are many “cash” and “almost-cash” alternatives other than emptying the savings account.
With persistently low interest rates, cashing out a CD that is near maturity might be an option, too. You’ll pay a penalty, based on how long you have had the certificate, the original term limit, and the interest rate. You may pay a minimal early withdrawal penalty to avoid higher interest rates on financing options.
Financing Your Renewal by Andersen of VA/DC Replacement Windows with Credit Cards
Most major credit cards offer zero-interest promotional packages with terms from 12 to 18 months. If you know you can pay the balance off within the promotional period, it is the same as paying cash, plus you still have access to your nest egg if there is an emergency or you have plans for a long awaited vacation in a few months.
Before you decide to use your credit card, consider the following:
- If you are late on payments, your interest rate will jump to a higher, predetermined interest rate. This rate could be as low as 9.99% or as high as 24.99%, depending on the credit card company and your personal credit score.
- Be careful how you access your credit card cash. If you use a credit card company check, most companies charge a cash advance fee for the privilege of zero-percent financing, typically 3% to 5%. On a $10,000 purchase, that means you would pay $300 to $500 for your “cash option”.
Advantages of Financing: More Options and Freedom?
If you’re thinking that cash or almost-cash options are definitely the best way to go, it’s time to look at the other side. Many real estate professionals and market researchers agree that upgrading your home with replacement windows increases property value significantly. You can expect a return on investment of 75% to 80% on replacement windows and doors. Plus, most homeowners say it feels great to live in a home that is beautiful, comfortable and energy-efficient, which increases the value to you.
If you have enough cash on hand to pay for the basics – environmentally friendly windows that lower home energy costs and improve curb appeal – that is great. But what if you really want the look and feel of our cascade patterned or fern leaf specialty glass? Are you looking for removable, paintable grilles that make interior redecorating projects easier? How about installing space-saving sliders and French patio doors?
If your cash in the savings account limits your choices so much that you feel you are settling for less than expected, you won’t be as happy with the results. All Renewal by Andersen replacement windows available to our Virginia and Washington, DC homeowners are guaranteed to perform exceptionally well, built to last for years, and are top-rated in the industry for energy efficiency. But our goal is to help you choose options that satisfy your budget and your aesthetic goals.
Loan Options and Perks
Loans attached to home mortgages offer tax breaks for filers that itemize deductions. Banks also offer unsecured loans up to $100,000 for home improvement projects.
Here are five questions to ask yourself when deciding whether to finance or pay cash for your Renewal by Andersen replacement project.
- Will paying cash limit my design choices?
- Will paying cash affect my long-term retirement goals?
- Do I have enough cash reserves to cover unexpected life-events?
- Do I want to take advantage of tax incentives and home mortgage interest deductions?
- Can I pay off credit card debt on time to avoid high interest, fees or penalties?
Renewal by Andersen of Virginia & Washington DC Helps You Make the Best Replacement Window Decisions
Of course, Renewal by Andersen of Virginia and Washington, DC offers special discounts and financing options for homeowners that make your decision easier. Just give us call at 877-915-8840 or fill in the form on this page for more details.