Amortization

Financing and Contract Terms - Consumer Protection pillar

Also known as: amortization period

The schedule by which a loan or rental obligation is paid down over time. HVAC rental contracts typically amortize over 10-25 years.

Amortization is the schedule by which the principal balance of a loan or financing obligation is reduced through scheduled payments. For HVAC rentals, the 'amortization' is functionally the rental term (typically 10-25 years) during which the customer's monthly payments theoretically pay down the equipment cost plus financing charges. Unlike a mortgage, most HVAC rental amortizations are open-ended: the contract auto-renews if the customer doesn't formally exercise a buyout, meaning the consumer can pay 'amortization' indefinitely past the equipment's actual lifespan.

See the full Ontario HVAC and home energy glossary or browse the Consumer Protection pillar.