The Best Ways to Finance Your Furniture

Furniture is a necessity in our homes, but unfortunately it can often come with a hefty price tag. If you’re in need of new furniture, but don’t have the funds to make the purchase outright, financing is a great option to consider.

However, not all financing options are created equal. In this article, we’ll take a closer look at the best ways to finance your furniture, including pros and cons of each method. We’ll also answer some frequently asked questions about furniture financing to help you make an informed decision.

Option 1: Retail Credit Cards

Retail credit cards are a popular way for consumers to finance purchases at their favorite stores. Many furniture retailers offer branded credit cards that come with benefits like rewards points, special financing offers, and exclusive discounts.

Pros:
– Special financing offers: Many furniture retailers offer deferred interest financing, which means you won’t pay any interest on your purchase for a certain period of time (typically 6-18 months) as long as you make the minimum payments on time.
– Rewards points: Some retail credit cards offer rewards programs that allow you to earn points for your purchases. These points can often be redeemed for discounts, free items, or other rewards.
– Convenience: If you frequent a particular furniture retailer, having their branded credit card can make it easier to make purchases and manage your account.

Cons:
– High interest rates: If you don’t pay off your balance within the promotional financing period, you could be hit with high interest rates that can make your furniture purchase much more expensive in the long run.
– Limited use: Branded retail credit cards can typically only be used at the corresponding retailer, which means you may need to open multiple credit accounts to finance different pieces of furniture from different stores.
– Credit score impact: Opening a new credit account can temporarily lower your credit score, especially if you’re using a large portion of your available credit.

Option 2: Personal Loans

Personal loans are another popular way to finance furniture purchases. These loans can be obtained from banks, credit unions, or online lenders, and can often be used for any purpose – including buying furniture.

Pros:
– Lower interest rates: Personal loans typically come with lower interest rates than retail credit cards, which can save you money in the long run.
– Flexible repayment terms: Depending on the lender, you may be able to choose from different repayment terms (such as 12, 24, or 36 months) to fit your budget.
– No restrictions on use: Unlike retail credit cards, personal loans can be used for any purpose – not just furniture purchases.

Cons:
– Credit score requirements: To qualify for a personal loan with a reasonable interest rate, you typically need to have a good or excellent credit score.
– Origination fees: Some lenders charge origination fees (usually a percentage of the loan amount) which can add to the overall cost of the loan.
– Hard credit inquiry: Applying for a personal loan usually requires a hard credit inquiry, which can temporarily lower your credit score.

Option 3: Store Financing

Many furniture retailers offer their own financing options through third-party lenders. These loans can be used to purchase furniture directly from the retailer, and often come with special financing promotions.

Pros:
– Easy approval: Store financing may be easier to qualify for than a personal loan or credit card, since the retailer partner with lenders who specialize in consumer financing.
– 0% interest promotions: Many store financing options offer 0% interest promotions for a certain period of time, making it easier to pay off your furniture purchase without accruing interest charges.
– No down payment required: Store financing may not require a down payment or deposit, which can help make your furniture purchase more affordable upfront.

Cons:
– High interest rates: If you don’t pay off your balance within the promotional period, you could be hit with high interest rates that can add significantly to the cost of your furniture purchase.
– Limited options: Store financing options may only be offered through certain retailers, which could limit your choices when it comes to furniture selection.
– Late fees: If you miss a payment or pay late, you may be subject to late fees or other penalties that can increase the overall cost of the loan.

FAQs

Q: What should I consider when choosing a furniture financing option?
A: When choosing a financing option for your furniture purchase, consider factors like interest rates, repayment terms, and any fees or penalties that could be added to the cost. You should also factor in your own credit score and ability to make payments on time.

Q: Will financing furniture purchases affect my credit score?
A: Financing furniture purchases can impact your credit score, both positively and negatively. Making on-time payments can help improve your credit score, while late payments or missed payments can hurt your credit score.

Q: How much should I finance for furniture purchases?
A: The amount you finance for furniture purchases will depend on your own budget and the cost of the furniture you want to buy. It’s important to borrow only what you can realistically afford to pay back, and to choose financing options with interest rates and terms that fit your needs.

Q: Can I use home equity to finance furniture purchases?
A: Home equity loans or lines of credit can be used to finance a variety of purchases, including furniture. However, it’s important to remember that you’re putting your home up as collateral, and failure to pay could result in foreclosure.

The Bottom Line

Financing furniture purchases can be a great way to make larger purchases more affordable. However, it’s important to carefully consider your options and choose a financing method that works for your budget and credit score. Whether you opt for a retail credit card, personal loan, or store financing, be sure to read the terms and conditions carefully and make payments on time to avoid additional fees or penalties.