Personal Loans

Appliance Financing: 4 Options to Consider

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Whether you’re in the market for a new refrigerator, stove or washer and dryer set, investing in new appliances can be pricey and may require financing. Luckily, there are plenty of options for appliance financing. Click below to learn more:

Appliance financing: What are your options?

In-house financing

Many home improvement stores — like Lowes or Home Depot — offer in-house financing in the form of in-store credit cards. In most respects, these cards are just like regular credit cards in that you can charge your purchases and pay them off over time. However, the big difference is that this line of credit is only valid at the store with which it is opened, meaning that you can only use it to make purchases at that particular store.

If you shop at the store where you intend to buy your appliances often, these cards can be a good choice. In addition to giving you the option to break up big purchases into more manageable, monthly payments, these cards may offer sign-up incentives, like interest-free financing for a certain period of time.

How to qualify

In-store financing is often easier to qualify for than a traditional credit card. You can often apply for this kind of financing while shopping online or ringing up your items at check out. In most cases, qualifying is as easy as running a credit check and you often only need “fair credit” — or a score between 580 and 649 — in order to be approved. These more relaxed qualifying standards are often a reason why people will use in-store financing as a way to build up their credit score before applying for another card.

Rent to own

Rent-to-own transactions work exactly as the name suggests: You’ll take home your appliance but make weekly or monthly payments as part of a leasing agreement. Each time you make a payment, the lease renews itself. If you decide to stop paying, you’ll need to return the appliances, though you are free to do so at any time.

However, if you continue to make payments toward those appliances for a certain period of time — generally about 12 to 24 months — you will eventually own the items outright. Since this financing option typically doesn’t require a down payment or credit check, it can be a good plan for those who wouldn’t qualify for traditional lending. However, depending on the fees that are being charged, rent-to-own prices on many household items can end up being more expensive than they would be if you had bought them upfront or bought them with a credit card.

How to qualify

As stated above, you don’t need to undergo a credit check to get your appliance financing with a rent-to-own model. Instead, you’ll likely have to provide the store with some personal information. The exact information required may vary store-to-store. However, it may include your name, address, and date of birth, income information (the address of your place of employment, for example), housing information (such as the contact info for your landlord or mortgage company) or references.

Personal loan

Personal loans are a form of unsecured debt that can be used for nearly any purpose, including buying new appliances. Unlike secured loans — where your loan is backed by collateral — personal loans are backed only by your promise to repay the debt.

Your financial situation, like your income and credit, are heavily weighed by the lender when determining your loan eligibility. These factors will also affect the interest rate that you’re given. As a rule, personal loans tend to come with higher interest rates than secured forms of debt. And although there are loans for subprime borrowers, those could come with high interest rates — some even as high as the triple-digits — depending on your credit score.

How to qualify

Before getting a personal loan, it’s important to make sure you shop around for the best rates for your financial situation. In most cases, you can get quotes from lenders with a soft credit check, which won’t affect your credit score. You’ll need to provide information, such as your name, address, birthdate and income; in return, you’ll get an estimate of the rates and terms you may qualify for. However, you should also consider each lender’s fee structure. Doing so can help you choose a lender you’re likely to qualify for that’s also the most affordable.

When you choose a lender to formally apply with, you’ll submit to a hard credit check (which dings your credit). The lender will need to verify information, and thus, you may be asked to provide supporting documentation, such as pay stubs or your tax return, to verify your income. Once you’ve been approved, funding can take from as little as one business day to over a week depending on the lender.

0% APR credit card

A credit card is a line of credit with a maximum borrowing limit determined by your creditor. You can make purchases using your credit card on a rolling basis, up to your credit limit. You’ll be expected to make monthly payments against your principal balance and interest. How much you’ll need to pay will vary based on how much you’ve borrowed during the last statement period. Depending on your credit, a credit card could have a higher APR than a personal loan.

Borrowers with strong credit may qualify for credit cards with a promotional 0% APR period, which typically lasts between 12 to 21 months. With these types of cards, you can make purchases and repay your debt without fees. However, if you don’t repay your balance before this period ends, you may be hit with deferred interest.

How to qualify

Credit cards offering 0% APR promotions are reserved for those with strong credit. When applying, you’ll need to provide personal information, like your date of birth and Social Security number. You’ll also need to self-report an amount for your income and be willing to submit to a hard credit check.

While you can receive approval in minutes, it may take several business days or weeks for your new card to arrive in the mail.

Bottom line

In many cases, an appliance is a must-have in your home. If you can’t wait to save up cash to pay for a new appliance, you’ll want to choose a financing option that works best for your money. For borrowers with subprime credit, that may be in-house financing, where you may qualify for a line of credit and receive a low or no-interest rate for a set period of time. (While a rent-to-own agreement may also be a viable option for subprime borrowers, it could also work for any shopper that wants to do a trial run on a new appliance. It can be more expensive, however.)

For those with strong credit, a personal or credit card with promotional financing may be a better fit. Where a personal loan offers fixed payments and a clear repayment timeline (and the potential to receive a large amount of funding for other needs), a credit card with zero interest for a year or longer may be the most affordable option.

No matter how you choose to finance your purchase, make sure you minimize the amount of time you’re in debt. Interest charges add up quickly, while monthly payments reduce your cash flow and limit your ability to save.


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