Finance

The Best Way To Financing Your Furniture Purchase In 6 Easy Steps

furniture finance
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Are you looking forward to upgrading the décor of your house, but you don’t have the money upfront? If this is the case, then there is nothing to be worried about this. With the availability of multiple furniture finance options in present days, you would be able to make your dream purchase conveniently without any hassles.

Furnishing a new house or apartment can be considered one of the most expensive parts of moving. Even, if you have decided to replace your old sofa with a new one or expand your closet space, it can cost you a huge amount of money.

So, most people find it to be unaffordable if they have to pay the entire amount in one go. If you are going through the same situation, then this blog post will help to solve all your related concerns. In this comprehensive guide, we will mainly focus on talking about the best ways in which you can finance your furniture purchase. So, now, let’s get started with the detailed discussion:

Best Ways In Which You Can Finance Your New Furniture Purchase

In the market, you will come across many different ways to finance new furniture which include credit cards, rent-to-own alternatives, home equity loans, layaway, in-store financing, and personal loans.

If you are confused about which particular option to choose for your requirement, then you need to first get a good understanding of all these financing alternatives. Don’t worry, we will give a detailed brief about these options in the following section to guide you in making a good decision.

Note that, in this case, your decision will be solely dependent on what you are purchasing and your financial situation. So, one option which might be right for someone may not be right for you. Now, without any further delay, let’s talk about these alternatives in detail.

In-Store Financing

Presently, a lot of furniture stores are involved in offering the option of financing. It is easy to sign up for and many of them tend to offer loans with a promotional introductory rate of zero percent APR for the first 12 to 24 months.

If you think that you would be able to pay off your loan before that period, then it could be a great option for you to choose. But, one of the important things to note in this aspect is that most of these deals come with a deferred interest clause.

It means that if you fail to pay back the loan by the end of the promotional period, then all the interest you had to pay would be added to your loan amount. As interest on these types of loans is generally between 20 to 30 percent and so, it can add up immediately.

Rent-To-Own Stores

Are you still not sure whether to purchase a new sofa or not? If this is the case, then you can choose to take furniture for rent. Some of the furniture stores provide you with this option. The best part about this is that you can return the piece of furniture you have taken any time you want without charging a fee.

Generally, there is no credit check in this case. Also, this particular alternative could be ideal whenever you only need something for a small amount of time. But, this option is not suitable, if you rent it for the long term as in that case, you could end up paying more than the actual worth of the item. You will again find that some of the rent-to-own stores charge a balloon payment in case you wish to keep the rented item after the completion of your rental period.

Layaway

It is another great in-store alternative for purchasing a new piece of furniture. This option is much different when compared to the other available financing alternatives. Layaway allows you to reserve a piece of furniture that remains in the store until you have paid the entire amount in installments.

If you think that you would be able to pay off your loan before that period, then it could be a great option for you to choose. But, one of the important things to note in this aspect is that most of these deals come with a deferred interest clause.

You can take the furniture home as soon as you had paid it off. The best thing is that you would not have to pay any kind of interest rate in this case. But, there are some drawbacks to purchasing furniture on layaway.

Some of the layaway deals necessitate a down payment before you start paying installments. While others might charge a one-time fee before you initiate making payments. And the worst part is that in case you change your mind that many of the deals may charge substantial cancellation fees from you. Again, if that particular type of furniture goes on sale while you are paying it off, then you would fail to take advantage of this.

Home Equity Loans

It typically involves borrowing against the equity amount in your house. As it is secured with your house as collateral and so, the lenders are most likely to provide more favorable terms and rates on this than on an unsecured personal loan. Thus, it can be called a more affordable alternative for borrowers who do not have stellar credit. But, in this case, you have the risk of losing your house if you fail to pay back the loan on time.

Personal Loans

Personal loans are regarded as a recognized option for those who do not wish to utilize in-store financing for purchasing furniture. But, you should necessarily have a low debt-to-income ratio and good credit, if you wish to get the best deal on a personal loan. Typically, these loans range from $2,000 to $50,000.

But, you can even come across lenders who provide as much as $100,000 and as little as $1,000. The rate of interest ranges between 6 to 36 percent and the terms often span between 3 to 5 years.

Note that this option is less risky, but you might not be able to take advantage of the 0 percent interest rate in this case. Again, if you choose a lender who does not charge a prepayment penalty, then you would be able to save your money on interest by paying back the amount early on.

Credit Cards

There are mainly two situations in which credit cards could be beneficial. One is when you wish to take the advantage of the 0 percent financing whereas the other is when you are considering making small purchases. You would be able to reap benefits by utilizing a credit card for small purchases.

And you can repay the amount swiftly. Again, for larger purchases, you should consider signing up for a new card with a 0 percent promotional period and without a deferred interest rate. In this way, you would not have to go through the risk of paying an extra amount on interest if you have missed a payment or you cannot pay it off before the promotional period gets over.

Concluding Thoughts

All in all, one can conclude from this guide that in-store financing is much easier than opting for a personal loan. Just, you need to make the repayments on time. But, if your credit score is robust, then personal loans could help you to save your money, and also comes with less risk. Hopefully, you have found this furniture finance guide to be informative and useful. 

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