How to Finance Furniture: Smart Strategies for Your Home (2024)

Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate personal loans to write unbiased product reviews.

• 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.
• You want a financing option for furniture that charges 0% interest until you can pay it off.

Introduction

The basics of furniture financing

Whether you're a new homeowner or it's time for an upgrade, buying furniture can be costly. Deciding how to finance furniture requires looking into several options. Even if you don't have stellar credit, furniture financing is likely within reach.

Furniture financing is taking on debt in order to buy the furniture now and pay later. There are definite pros and cons to every method.

When you're ready to finance a big furniture purchase, consider your credit score, how much you plan to spend, and how quickly you can pay off the balance.

Financing options available

Credit cards and in-store financing

Plenty of people choose to finance furniture with a credit card, and it can work well. You may already have a credit card with a low APR, or you can try to find a card with a balance transfer offer.

Bank of America's Jason Gaughan, head of consumer credit card products, suggests financing furniture with a flexible rewards credit card with a 0% introductory APR. Obviously, the best credit card option is one that won't leave you with hefty interest charges months or years down the line.

Credit cards can be the best option for financing furniture, but only if you can secure a 0% APR. These offers don't last forever, so read the fine print and be ready to pay off the balance aggressively before the rate increases (often after 12 months). You may also try to get another balance transfer before your 0% APR introductory period ends.

Personal loans

• 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

If you decide to try a personal loan, do a little pre-shopping to determine how much you'd like to borrow. Then look into several lenders to compare your options.

Buy now, pay later services

Buy now, pay later (BNPL) platforms let you to buy items without paying for them all at once. Instead, you pay only a portion of the price upfront, spreading out the remaining cost over a predetermined number of installment payments. These payments are often interest-free, and the approval process is fairly fast for consumers.

BNPL has become an exponentially more popular option for shoppers, particularly for those who do their buying online. Companies likeAffirm,Afterpay,Klarna, andZipall partner with various retailers to offerpoint-of-sale installment lending(another name for BNPL).

Home equity loans

Homeowners might consider a home equity loan to help with the cost of new furniture, though this method can be more cumbersome.

With a home equity loan, you'll need a certain level of equity in your home, meaning the portion you own outright. A home equity loan, which uses your home as collateral the same way as your mortgage does, provides a lump sum and usually has a fixed interest rate.

John Owens, executive vice president at Monterey Financial, notes that home equity loans can be more complex to arrange and might 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.

If you think you'd qualify for a home equity loan, don't just pick the first lender you come across. Some lenders charge no fees and may even work with clients with low credit scores.

Home equity lines of credit

Much like a home equity loan, a home equity line of credit provides funds based on the amount of equity you have in your home, and you risk foreclosure if you default on the debt.

Unlike a home equity loan, a home equity line of credit (HELOC) offers a fixed maximum borrowing amount. Your lender determines a borrowing limit, and you can use as much or as little as you need to at any time, rather than taking out a lump sum.

HELOCs work much like credit cards, except that your home's equity is what provides backing. You can borrow up to the maximum limit, pay it back, and borrow again, as long as you don't exceed your maximum.

If you anticipate making several large purchases over the next several years, a HELOC can be a good financing option. You could spread out your furniture buying as long as you don't exceed the maximum limit and avoid the hassle of getting multiple loans.

If you're interested in a HELOC, be sure to research multiple lenders to find the best deals. Ideally, you'll want a lender that doesn't charge too many up-front fees.

The Consumer Financial Protection Bureau (CFPB) recommends getting at least three estimates to compare factors like up-front costs, early termination fees, closing costs, interest rates, and various penalties.

Furniture financing options to avoid

As long as you're looking into solid financing options for your furniture, there are a couple of loan types you'll want to avoid.

Payday loans, for example, are notoriously high in fees. Watch out for loans that often charge $10 to $30 per $100 borrowed, as the CFPB says is common for payday loans. Plus, these loans aren't ideal for long-term financing, so you're better off finding a loan that gives you at least six to twelve months to pay it off.

FAQs