Personal Loans

Furniture Financing: Review These 8 Options Before You Shop

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Furniture can make a space feel like home. But when you’re staring down an empty room, or your ancient, uncomfortable couch just isn’t cutting it anymore, the thought of buying furniture can be somewhat overwhelming. And, depending on your needs and budget, it can be a substantial expense — especially if you’re looking to buy new from a traditional retailer.

Below, we’ll discuss the pros and cons associated with eight common furniture financing options, from in-store financing to personal loans. That way, you’ll be better equipped to figure out which one is best for you, so you’ll know how to proceed when you go to buy furniture.

How does furniture financing work?

If you do decide to finance your furniture purchase, you’ll want to make sure you’re still making a purchase that’s within your budget to pay off. Make sure to factor interest payments into your total costs.

How furniture financing works all depends on the method of financing you choose. In-store financing, for example, is a common option you’ll find from major retailers that sell furniture. Different stores will have different offerings, but in general in-store financing provides qualified applicants with a 0% APR offer that lasts for a number of months. However, if you don’t pay it off before then, you may be on the hook for backdated interest on the remaining balance.

Another method you may want to consider is using a limited-time 0% APR credit card to pay for your new furniture. This would generally require excellent credit, and you’ll want to make sure you can pay off your balance before the promotional period ends so you aren’t hit with interest.

Then, there are options like personal and secured loans, which allow you to structure your payments over a set period of time, sometimes in exchange for quick cash — but you’ll pay interest from the start.

Whichever option you choose, it’s a good idea to weigh your options carefully to make sure that you get the best deal and can stick to the required repayment schedule.

8 furniture financing options

Paying cash

Paying in cash is the best way to save money on your purchase. That’s because, when compared to payment methods like credit cards or personal loans, it avoids the added interest charges and fees that can inflate your total costs. For those who are able to plan ahead and stick to a savings schedule, this is a solid option that can give you peace of mind since you know you aren’t taking on debt and you own your new furniture outright.

However, this isn’t a realistic option for everyone, so you may wish to explore other options or consider using a combination of options — including saving money to put toward your furniture purchase — to minimize costs.

In-store financing

In-store financing can be a solid option for those with existing credit because it gives you access to 0% APR financing for a set period of time. Those with bad to excellent credit scores may qualify. Provided you are able to pay off your balance before the promotional period ends, you’d only pay the cost of the furniture. So even though you put off the larger expense and instead opted for set monthly payments, you’d save money when compared to using something like a credit card.

One well-known option, for example, is Ashley Furniture’s financing program. It offers 0% APR promotions ranging from six to 72 months, depending on the cost of the item and whether you choose the in-store or online purchasing option. Once the promotional period is over, the 29.99% interest rate would retroactively apply to any remaining balance.

The financing program from Bob’s Discount Furniture operates in a similar way. It gives qualified applicants access to six- or 12-month 0% APR financing, depending on how much you need to finance. If you don’t pay off the balance in full within the promotional period, you’ll also get dinged with that retroactive interest charge, at a rate of 28.99%. Those who are interested should be aware that paying the minimum amount due each month will not wipe out your total balance over the course of your promotional rate term.

Bob’s Discount Furniture also offers an option for those who may not have good credit, or any credit history, in the form of a lease-to-own program for certain in-store purchases. To qualify, you’d have to be at least 18 years old and have a checking account as well as a credit or debit card.

Credit card

If you already have a credit card with a high enough credit limit to charge your new furniture, this can be a quick and easy way to fund your purchase, provided you can pay off the balance before your next statement and thus avoid any interest charges.

For those who are okay with applying for a new card, a card with a 0% promotional APR can also be a solid option. However, you usually have to have excellent credit to qualify, depending on the card. You’d get a set number of months to pay off the balance, during which time you wouldn’t have to pay any interest. Once the promotional period ends, though, you’d have to start paying interest. Some credit cards may retroactively charge interest on the remaining balance, though not all do.

Personal loan

A personal loan is an unsecured loan that can be used for a wide variety of purchases. You’d make monthly payments for a predetermined number of months, and you would typically pay interest at a fixed rate, as well as any fees associated with that particular loan. Some personal loans come with origination fees, but many do not.

In general, the better your credit, the better the terms of the loan. Because there is no collateral securing the loan, lenders typically heavily weigh your credit score and financial history. This means it may not be the best option for everyone, as those with poor credit scores may end up paying much higher rates or struggle to qualify.

For those who are interested, however, rate-shopping, as well as comparing the terms and fee schedules of personal loan options, is an important part of the pre-application process.

Secured loan

Secured loans are generally easier to access than credit-dependent loans. Because the loan is backed by collateral that the lender could seize if you are unable to pay, borrowers with lower credit scores may have a better chance at qualifying and rates may be lower than they’d be for secured loans.

In general, however, these loans are not a great option since they require you to put up your existing assets as collateral. If you were to miss a payment, you could lose your collateral. But for those who don’t have great credit and are confident that they can stick to the repayment schedule, this may be an option to consider.

Payday alternative loan

Payday alternative loans are offered by federal credit unions, and, as the name implies, are a safer alternative to payday loans. That’s because their overall terms are much more borrower-friendly. For example, these loans usually come with repayment terms of one to six months, and amounts range from $200 to $1,000. In addition to interest payments, the credit union may also charge an application fee of up to $20 for these loans.

These are easier to pay off than a shorter term, higher cost payday loan. However, the rate on payday alternative loans may still be comparable to that of a credit card. Additionally, you’ll have to be a credit union member, in some cases for several months, to qualify for a payday alternative loan.

Payday advance

Payday advances allow you to take money out of your future earnings to pay for expenses now. These are ideally suited to those who have saved money to put toward their furniture expense but need a small amount to bridge the gap.

Companies like Earnin and Dave that offer payday advances may be good alternatives for borrowers with poor credit who, for whatever reason, absolutely need short-term furniture financing. These options don’t rely on credit to qualify and cap your borrowing amount to $100 total or per day, respectively.

Keep in mind, however, that since you’re borrowing from your future self, you’ll need to adjust your budget for the next paycheck to accommodate the discrepancy and avoid taking on debt to cover your regular expenses.

Payday loan

Payday loans are a short-term financing option. The bar to qualify for one is usually pretty low — a pay stub from work, some form of valid identification and bank account may be enough to get one. That means even those with no or bad credit can usually get their hands on a payday loan.

However, because of the extremely high interest rates, which can range as high as triple digits, these can prove extremely costly and even financially dangerous, leading to loan rollovers and additional fees. If you don’t have any other options and absolutely need to buy new furniture, this may be a viable option. However, for the vast majority of people, payday loans are not a good option and should be avoided at all costs.


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