Whether you just moved in or are redecorating your home, you may need (or want) to select new furniture. While finding those perfect pieces can be fun, it may be a little more difficult to swallow the cost.
If you need help realizing your vision for your dream home, you have furniture financing options, including personal loans and no-interest furniture loans. We’ll cover how each works so you can stretch out on your new chaise lounge knowing you made the right choice.
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Personal loans vs. no-interest furniture loans
While it’s often best to save for new furniture and pay cash, furnishing a new home can be costly, and you may not want to sit on the floor and eat dinner while you wait to build up your savings. The nationwide average cost to furnish a home is about $16,000, according to HomeAdvisor. If you need to pay over time, you might think of using a credit card. But considering that the average credit card interest rate was 21.86% as of August 2024, according to the Federal Reserve, you may be able to do better with a personal loan, store financing, or both.
Personal loans
Personal loans are available from banks, credit unions, or online lenders, and provide a lump sum of money for purchasing furniture, which is then repaid over time in fixed monthly installments with interest. You may be able to borrow anywhere from a few hundred dollars to over $100,000, and some lenders offer 10 years or more for repayment. Higher available loan amounts and longer repayment terms can make a personal loan a more flexible option than a no-interest furniture loan.
The average interest rate on a 24-month personal loan was 12.33%, according to the Federal Reserve. Personal loans are also quick to obtain, with many online lenders offering next-day or even same-day funding. The application process is generally straightforward and can typically be completed online. But bear in mind, you’ll need excellent credit to have a chance at the lowest rates lenders advertise. You’ll also need to show proof of income.
Tip: Prequalify with multiple personal loan lenders to see rate and term estimates before applying. When you prequalify, the lender runs a soft credit check, which won’t hurt your score. Note that when you formally apply for a loan, the lender will run a hard credit inquiry, which will temporarily ding your score.
No-interest furniture loans and other store financing options
Many furniture stores offer online and in-store financing options that provide an interest-free period. Some, like Rent-a-Center, offer rent-to-own options that allow you to own the furniture after six months of no-interest payments. Others, like Ashley and Wayfair, offer 0% interest with a store card on certain purchases or with point-of-sale financing through companies like Affirm. The catch with these options is that you’ll typically pay a very high annual percentage rate (APR) if you’re unable to repay the balance within the interest-free period.
For example, Wayfair’s credit card offers no interest for 24 months on purchases of $2,999 or more. After 24 months, though, you’ll pay the regular APR on the remaining balance, which could be over 30%. Point-of-sale financing programs typically come with shorter interest-free periods. For example, with Affirm, you can pay for your furniture in four payments every two weeks (for a total of eight weeks, or about two months). You can also choose a loan from Affirm that will incur interest over a longer term, which is the same as a personal loan.
Pros and cons of personal loans for furniture
A furniture loan is a financial commitment you agree to for years — thoroughly consider whether the furniture you have your eye on is worth it.
Pros
- Longer terms: With a personal loan, you can typically choose a longer term than you would get with store financing options. Many lenders offer 5- and 7-year terms, and some may offer terms up to 10 years. Your payments will remain fixed for the duration of the term.
- Low, fixed interest rates: The average interest rate on a personal loan is 11.48%, which can save you a huge amount of cash when compared to putting your furniture purchase on a credit card.
- Flexible use: If you have other financing needs — like hiring a handyman or replacing an appliance — a personal loan can help with those costs in addition to helping you purchase the furniture you need. A store credit card, on the other hand, may only be useful at that specific store.
Cons
- Best rates reserved for borrowers with excellent credit: The lowest advertised rates for personal loans are generally only available to borrowers with excellent credit. If you have fair credit, you’ll likely pay more than the average rate, and if you have bad credit, you may not qualify.
- No interest-free period: Personal loans don’t come with an interest-free period, so you’ll start paying interest on the total balance right away.
- May take longer to process: While store financing options can be obtained immediately, it may take a few business days to get your personal loan, depending on the lender. That could mean you’d miss out on the great sale happening at your favorite furniture retailer.
Pros and cons of no-interest furniture loans
No-interest loans may be your best bet if you can repay the entire amount within the interest-free period. They could be your worst option if you can’t.
Pros
- May help you avoid interest: If you apply for a store card with a promotional interest rate or utilize same-as-cash financing, you may be able to avoid paying interest for up to two years or longer.
- Easy and quick to obtain: You can typically get no-interest store financing the same day you apply, right from the furniture store counter or from your online shopping cart.
Cons
- May require a down payment: Some interest-free financing promotions may require a down payment on the furniture you’re purchasing.
- Interest rate increases after promotional period: You’ll likely pay a high APR once the promotional period is up. If the offer is a deferred-interest promotion rather than a zero-interest promotion, you’ll also pay interest dating back to the original purchase if you fail to repay within the promotional period, so be sure to check the wording of the promotion.
When to choose a personal loan
One good reason to choose a personal loan over an interest-free store offer is when you need a longer timeline for repayment, since you can typically stretch out payments over several years.
It’s also a good idea to consider a personal loan if you have other expenses you need to cover, whether that’s consolidating credit card debt or paying for a kitchen remodel. Some people may prefer to cover all their homeownership expenses with one monthly payment.
When to choose a no-interest furniture loan
It’s generally a good idea to use the furniture store’s no-interest or deferred-interest financing offer if you can qualify and feel confident that you’ll be able to pay off the balance within the promotional period. Every store offers different terms, so compare your options carefully.
Tip: If you have a no-interest furniture loan (or other loan) on which the 0% period has expired, consider using a personal loan to pay off the balance. If your rate on a personal loan is lower than the new APR, you could save hundreds or even thousands of dollars.
Bad-credit furniture financing
If you have bad credit, there are a few ways you can obtain furniture financing:
- Look for no-credit-check options: Some furniture stores offer no-credit-check financing options on certain purchases. Keep in mind that these typically come with shorter interest-free periods.
- Prequalify with an online lender: Some online lenders use alternative underwriting data to approve more borrowers. This can make it possible to get a bad-credit personal loan. Plus, you can typically check your rate without hurting your credit.
- Apply with a cosigner: A cosigner is someone who effectively vouches for you on a loan application and agrees to repay your loan if you can’t. This makes some lenders more likely to approve your application. A cosigner is usually a good friend or relative with good credit.
- Take steps to improve your credit score: Making on-time payments, asking for higher credit card limits, and paying down debt are all strategies that can improve your credit score. Using a tool like Experian Boost can even improve your score instantly, assuming you pay your bills on time.
FAQ
Is it possible to get a no-interest furniture loan with bad credit?
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Can I use a personal loan to finance furniture purchases?
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How long is the typical promotional period for no-interest furniture loans?
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What happens if I fail to repay a no-interest furniture loan within the promotional period?
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