Appliance Financing: 4 Options to Consider

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 that allow you to pay monthly instead of covering the entire cost upfront. Click below to learn more:

Plus: Appliance financing FAQ

Appliance financing: What are your options?

In-house financing

Many home improvement stores — like Lowe’s 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 usually 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 669 — 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.

Depending on the fees that are being charged, though, rent-to-own prices on many household items can end up being more expensive than they would be if you had bought them upfront.

How to qualify

As stated above, you typically 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. It may include your name, address, 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. 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 and 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 charges.

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.

Appliance financing FAQ

Before choosing your strategy, have a look at these frequently asked questions about the best way to finance appliances:

Should I finance appliances?

Appliance financing often makes sense when you don’t have the cash on hand to pay for your purchase upfront. Even if you do have just enough, you might not want to drain your savings account. After all, you might need that money to cover an emergency or a purchase that doesn’t come with financing options.

That said, paying for an appliance upfront is usually the cheapest option, as it means you won’t incur any interest charges. If you can pay off your appliance on a financing plan that doesn’t incur interest (such as a 0% APR credit card or store payment plan), you also don’t need to worry about increasing your overall cost.

Appliance financing plans that come with interest charges can be the better option if you don’t have the cash to pay upfront and want to spread your payment out over time. If you can make on-time payments, you might also improve your credit score and build up your credit history. Be careful not to miss payments, though, as that could damage your credit score and incur fees.

Which is better, paying upfront or monthly for appliances?

Paying for an appliance upfront tends to be the most affordable option, as it means you won’t incur interest or fees. But if you can pay monthly on a plan with 0% interest, you also don’t need to worry about increasing your costs (unless you miss payments or fail to pay off the appliance before this 0% APR period ends).

That said, paying monthly might cause less stress than paying all at once, even with interest charges. If you can find a low-rate personal loan, for example, it might be preferable to paying a big expense all at once.

Will financing appliances hurt my credit?

Taking on a new line of credit or loan might cause your credit score to dip slightly at first. However, your credit score will increase if you make on-time payments on your loan. Making on-time payments, as well as having a mix of credit, are two factors that can increase your credit rating.

To avoid damaging your credit during the application process, shop around with lenders that offer a prequalification online. This prequalification only involves a soft credit check, meaning you can compare offers without impacting your credit. Once you find an offer you like, you’ll submit a full application and the lender will run a hard credit inquiry.

Where can I get the best deal on appliances?

You can find good deals on appliances at both national and local retailers. Some popular national stores include Lowe’s, The Home Depot, Costco and Best Buy. You might also shop for appliances on Amazon. Prices may vary from store to store, and it’s always good to keep an eye out for special promotions or holiday sales.

Some stores may have more flexible appliance financing options, whereas others offer discounts for teachers or members of the military. It’s also worth taking supplemental costs into account, such as delivery charges or warranty fees. Finally, some stores may offer refurbished or “open-box” appliances (i.e., display models) for lower prices.

When is the best time to buy appliances?

Retailers often offer the best sales around major holidays, such as President’s Day, Fourth of July and New Year’s. That said, these times can be the most popular times to buy, so plan to shop early on in the sale so your appliance doesn’t get sold out. You might also keep an eye out for stores that are having a going-out-of-business sale.

The best time to buy appliances for you might also be when you have the time and bandwidth to do research and shop around for the best price and financing option. If you want to save the most money, don’t rush into a major purchase. Of course, if your appliance at home is no longer functioning, you might want to buy sooner rather than later.

Should I buy appliances in a bundle?

Buying appliances in a bundle can lead to greater savings, as long as the bundle contains exactly what you need. Make sure to look over the deal carefully to ensure you’re not paying for unnecessary items. It’s also a good idea to research the quality of the appliances; after all, you want to get a good value, not necessarily pay the lowest price. If you go for the cheapest option, it could cost you more in the long run if it breaks or needs to be replaced. When shopping for appliances, try to strike a balance between quality and cost so you can stay within budget while also investing in a piece of equipment that will last for years to come.