Discover 5 ways to finance your furniture purchases.

Are you in the market for new furniture but can't afford to pay for it all at once? Luckily, there are several furniture financing options available to make your purchase more manageable. One option is to use a credit card with a low or zero interest rate for a certain period of time. Another option is to apply for a personal loan from a bank or credit union. Some furniture stores also offer their own financing plans with low or no interest rates. If you have a good credit score, you may be able to qualify for a rent-to-own option. Lastly, consider layaway plans, where you pay for the furniture over time and receive it once the full amount has been paid. With these furniture financing options, you can find the best fit for your budget and take home the furniture you need.

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• Furniture can be expensive, but there are multiple ways to finance furniture purchases.
• Options for furniture financing include several types of loans and credit cards.
• Ideally, you want a financing option for furniture that charges 0% interest until you can pay it off.

Purchasing furniture can be an expensive venture, whether you're a first-time homeowner or in need of an upgrade. Therefore, determining the best way to financially support furniture purchases necessitates exploring multiple avenues.

Even if you don't have stellar credit, furniture financing is within reach.

How does furniture financing work?

Acquiring furniture through financing involves borrowing money to purchase the items upfront and pay off the debt later. Nevertheless, there are advantages and disadvantages to both options when it comes to obtaining sofas, tables, and footstools.

• Personal loan: Banks, credit unions, and online lenders can offer personal loans based on need.
• Credit card: Paying with a credit card can be simpler than taking out a loan, but beware of interest rates.
• Home equity loan: Borrow a lump sum based on your home's equity.
• Home equity line of credit: Set up a borrowing limit based on home equity, but only pay interest on what you use.
• In-store financing: Look for low-to-no-interest deals from retailers.

5 ways to finance furniture

When the time comes to finance a significant furniture acquisition, it's important to take into account your credit score, the amount you intend to spend, and the speed at which you can clear the debt.

Personal loans for financing furniture

If you're looking to fund your furniture purchase, a personal loan is a viable option. These loans are available through banks, credit unions, and online lenders. T

he loan amount is given to you in a lump sum, and you'll be required to make regular repayments in accordance with a pre-agreed plan.

Personal loans are installment loans, and your credit score plays a significant role in determining the interest rates you'll be offered.

In addition, lenders will consider your employment history, income, and debt-to-income ratio, which measures the percentage of your monthly income that goes toward paying off your debts.

Benefits of using a personal loan to finance furniture include:

• Interest rate may be lower than some furniture stores and credit cards.
• You can use the funds for any purpose, not only furniture.
• Your furniture doesn't serve as collateral.

Drawbacks to personal loans for furniture financing include:

• You may require a higher credit score to qualify
• Lenders may charge origination fees in addition to interest
• You'll be charged interest immediately, so prompt repayment is key

Before taking out a personal loan, it's important to do some research and figure out how much money you need. Once you have that number, it's a good idea to explore different lenders and see what they have to offer in terms of rates and terms.

Finance furniture with a credit card

When it comes to financing furniture, many opt for credit cards, which can be a viable option. You might already have a credit card with a low annual percentage rate (APR) or explore balance transfer offers.

Jason Gaughan, Bank of America's head of consumer credit card products, suggests using a rewards credit card with flexible terms and a 0% introductory APR. Of course, the best credit card choice is one that won't leave you with massive interest charges down the road.

Credit cards can be a suitable way to fund furniture purchases, but only if you can secure a 0% APR. It's vital to read the fine print, as these offers don't last forever, and you must pay off the balance quickly before the rate increases, usually after a year.

You may also seek another balance transfer before the 0% APR introductory period expires. One significant drawback of financing furniture with credit cards is the high interest rates. Therefore, it's crucial to find a low APR, ideally 0%, to avoid increasing your total cost.

Home equity loans for furniture financing

While a home equity loan can be an option for homeowners looking to finance new furniture, it may not be the easiest route. To obtain a home equity loan, you must have a certain amount of equity in your home. This refers to the percentage of your home that you own outright.

Similar to a mortgage, a home equity loan requires your home as collateral and typically comes with a fixed interest rate. However, according to John Owens, executive vice president at Monterey Financial, the process of obtaining a home equity loan can be more intricate and may be better suited for larger purchases.

Benefits of home equity loans to finance furniture include: 

• Monthly payments are consistent due to a typically fixed rate.
• Interest rates may be lower than for personal loans due to the home being used as collateral.
• Long repayment terms can make payments more affordable.

Some drawbacks of home equity loans for furniture financing are: 

• Default can result in foreclosure.
• The application process can be lengthy.
• There is strict criteria to qualify, including credit score and the amount of equity you have in your home.
• Added costs like origination fees and appraisal fees can be high.

Don't rush into choosing a lender for your home equity loan. Consider your options carefully, as some lenders are fee-free and willing to work with those who have poor credit scores.

Finance furniture with a home equity line of credit

In a similar fashion to a home equity loan, a home equity line of credit (HELOC) allows you to access funds based on the amount of equity you have in your home, and defaulting on the debt puts you at risk of foreclosure.

However, unlike a home equity loan, a HELOC provides a fixed maximum borrowing amount. Your lender sets a borrowing limit, and you can draw on as much or as little as you like, whenever you need it, as opposed to receiving one lump sum.

HELOCs function similarly to credit cards, but your home's equity secures them. You can borrow up to your maximum limit, repay it, and borrow again, as long as you don't exceed the limit.
If you plan to make numerous big purchases in the coming years, a HELOC might be a wise financing choice. You can stagger your furniture purchases, as long as you don't go over the maximum

limit and avoid needing to get multiple loans.
If you're looking for a HELOC, make sure to investigate several lenders to discover the best options. You'll want to find a lender who doesn't charge too many upfront fees if possible.

Examine a range of elements such as initial expenses, penalties for ending a contract early, final expenses, the rate of interest and assorted charges to make a comparison.

Get in-store financing for furniture

When making a purchase, consider financing options through the retailer. Although some may view in-store financing offers as cheesy, they can actually be quite attractive. In fact, they often have less strict qualifying criteria than personal loans or HELOCs. You may even be able to obtain a credit card or line of credit through the retailer's partners with competitive interest rates.

For example, Bob's Discount Furniture and Ashley Furniture offer zero-interest financing as long as you pay off your balance within six or twelve months.

Furniture retailers often have the most competitive introductory APR offers, so it's worth checking out financing possibilities from several retailers. Be sure to consider the minimum purchase amount and the time before interest charges begin accruing.

Pros of using in-store financing for furniture include: 

• It comes with convenient and flexible repayment terms.
• It may offer 0% APR if paid off within the designated period.
• Qualifying may be easier than other financing options.

Cons of using in-store furniture financing include:

• Interest charges will be high if not paid off before the introductory period ends.
• There's now as much flexibility as you would get with other financing methods such as personal loans.

When thinking about in-store financing, take time to carefully review the details of any credit agreement you may be entering into. While they can be useful, it's important to plan to pay off the full amount before the introductory offer expires.

Furniture financing options to avoid

When searching for reliable financing for your furniture, it's important to steer clear of certain loan types. Payday loans, in particular, are notorious for their exorbitant fees, often ranging from $10 to $30 per $100 borrowed, as reported by the CFPB. Additionally, these loans aren't designed for sustained financing, so it's wise to seek out loans that offer a longer repayment period of six to twelve months or more.

Furniture financing FAQs

When it comes to financing furniture, most credit scores will suffice, but limited options are available for those with poor credit. Some retailers may be more willing to offer financing to individuals with no credit or low credit scores. The preferred financing method depends on each individual's circumstances, but it should offer the lowest interest rate and fees for the purchase.

Credit card balance transfers and in-store financing are both reasonable options if they meet this requirement.

Financing furniture involves borrowing money and then paying it off over time, with various loan options available, some of which offer no interest charges if paid off within a specific timeframe.

While getting a furniture loan can be straightforward, a HELOC or home equity loan may require more time and effort. However, in-store financing options are available even for those with lower credit scores.