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If you’re planning to buy new furniture for your home, but do not have sufficient savings to do so, you can consider furniture financing. And, if you’re wondering what the best way to finance furniture is, this guide will set all your queries to rest.
The fact is, home furniture can be an expensive purchase. Home dwellers don’t always have the cash available to buy the type of furniture they want. And that’s when they turn to furniture financing.
With the right type of financing, furnishing your home doesn’t have to be a financial nightmare for you. The good news is that there are a variety of financing options that you can take advantage of.
Is financing furniture a good idea?
Furniture financing refers to a third-party financial company, a financial institution, or store lending you the money to purchase furniture. Typically, financing providers lend you a certain loan amount, which you then pay back at the decided loan interest rates.
Therefore, financing furniture, especially finance furniture online, is a convenient option when you don’t have enough money to buy the items you desire.
However, do remember that if you mess up with the loan plan, don’t pay your scheduled payments on time, or violate its terms and conditions — your financial situation can go awry. And, so will your credit report!
To find the best furniture financing options near you, you should compare costs in terms of the total amount of interest you’ll pay, the interest rate or APR, your repayment period or the loan term, and the monthly payment. In addition, it’s a good idea to evaluate both the benefits and risks of each type of financing. Once you’re convinced that it’s the right loan for you, you can go for it.
Furniture financing options
Although the best option to pay for your furniture is probably paying for it upfront, if you cannot do so, you need to find the best furniture financing option for your situation. Here are some popular financing choices.
An unsecured personal loan is a good idea to finance your furniture purchase. Keep in mind that taking out a low-interest rate personal loan for a short period is a better deal than a drawn-out loan term in the long run. This type of loan comes with the advantage that you don’t have to use any equity on your home or collateral to secure the funding. Therefore, there’s no requirement for a home appraisal.
Needless to say, your loan eligibility is based on your credit score, income details, and credit history. The rule of thumb is that borrowers with an excellent FICO credit score get the best interest rates. Do keep in mind that the loan comes with loan origination fees as well.
The loan money can be used for just about any purpose. Plus, you get quick funding. The downside to a personal loan is that you get a limited loan range of $1,000 to $50,000. This amount may not be enough to cover the cost of new furniture for your home improvement project.
In-store furniture financing
You can explore furniture stores that finance near you — provided you’re absolutely certain you can pay the balance money ahead of schedule. Most furniture stores offer buy-now-pay-later furniture financing. But, is it a good idea?
Buy-now-pay-later agreements — also known as store finance — is a way for you to purchase furniture items on credit and pay for them later. The payment is usually after a set interest-free period or in weekly/monthly installments. The monthly payments include the cost of goods, taxes as well as fees. These are paid overtime until you gain complete ownership of the item.
The advantage that such furniture financing payments and interest rates offer is that no interest will be charged on the promo purchase if you pay the amount in full within the promotional period. After the promotion ends, regular account terms apply to non-promotional purchases — depending on purchase amount, promotion length, and payment allocation. For new accounts, the typical purchase APR is 29.99% and the minimum interest charge is $2. Existing cardholders must evaluate their credit card agreement for the applicable terms.
Credit cards with promotional 0% introductory APRs
Using credit cards on furniture purchases is a good idea as long as you get promotional 0% introductory APRs. Make sure your credit card company doesn’t charge any deferred interest. Deferred interest options usually result in massive charges if you forget to make a payment.
Once the promotional period is over, if you’re still carrying a balanced amount, you’ll only pay interest on the remaining balance.
What’s the difference between furniture stores that finance and personal loans for furniture?
Most furniture and appliance retailers in a bid to encourage big purchases offer low or no interest financing. While a store credit card doesn’t seem like a bad idea, it does come with certain disadvantages. The interest rates are higher, the credit limits are lower than on a non-store card. And, if you charge close to the limit amount, it can have a negative impact on your credit utilization ratio, and on your credit score.
Moreover, since the issuer will check your credit report when you apply for a store card, credit inquiries can lower your credit score.
Simply put, stores often offer credit card agreements whereby they promise cardholders discounts or promotions but most of them could really hurt you if you’re not careful. Apart from the fact that you’re tempted to buy much more than you need, any late payment could cost you a huge amount of interest or deferred interest.
A personal loan offers you a better deal in terms of interest rates and affordability. The loan provides you with the option of fixed, manageable monthly payments.
Pros and cons of furniture financing with a personal loan
Before you choose any type of loan option, it’s a good idea to weigh its pros and cons. Here’s a look at the pros and cons of personal loans.
Pros Cons Allows you to easily purchase a new piece of furniture Applying for furniture financing can lower your credit score Helps you improve your credit report if you make payments on time Higher interest rates as it doesn’t involve collateral or home equity
What is no credit check furniture financing? Is it good or bad?
Usually, conventional furniture financing options are not available to borrowers or those not keen on a credit check. The fact remains that your credit record and credit score help determine whether or not you’ll get loan approval.
Having said that, a no credit check loan is very much possible. However, keep in mind that poor credit or no credit history would mean higher interest rates and shorter repayment periods.
You can get furniture financing — maybe through a furniture store, a personal loan, or a credit card. So, furniture financing options are possible when you do good research and find the best loan option.
Regardless of your current credit situation, you can get guaranteed furniture financing that fits your needs. The easy financing options make sure that you can buy the kind of furniture you’d always dreamt of.
Moreover, furniture loans can even help improve your credit score if you make your payments on time.
Can you finance furniture?
If you’re hoping to finance a furniture purchase but have a tarnished credit score, you can explore other furniture financing options, including personal loans or lease-to-own financing online. Or, you can always turn to credit card companies to finance you. Much like in the case of a personal loan, you can use your money wherever and whenever.