Furniture Financing: What You Should Know
Coryanne Hicks is a personal finance writer and ghostwriter, and formerly a representative at Fidelity Investments. In addition to articles, Hicks has ghostwritten whitepapers and financial guidebooks for dozens of industry professionals. Her U.S. News & World Report video series on how to start investing at any age won an honorable mention at the 2019 Folio: Eddie & Ozzie awards for best Consumer How-To video. She was also a 2019 SABEW Goldschmidt fellow for business journalists.
There comes a time in every adult’s life when the old couch or dining room table just won’t do anymore. Unfortunately, new furniture can come with a hefty price tag.
Furniture financing allows you to walk away with new furniture today and pay it off over time. Here’s what you need to know about furniture financing to get the best bang for your buck.
1. Check for retail financing
To start your furniture finance shopping, check with the retailer where you make your purchase. Some retailers offer financing on qualifying purchases. This can come in the form of an installment loan or credit card financing.
Some stores, like Big Lots, offer lease-to-own programs that accept no- or bad-credit shoppers and, in some cases, no down payment. You’ll make minimum monthly payments until you’ve paid the item off, at which point, you’ll own it. Keep in mind, between interest and fees, by the time you finish your lease payments, you may end up spending more on your furniture than your initial sticker price.
Stores like La-Z-Boy, Wayfair and Ikea also offer this option to customers. The terms and options will vary by retailer. In some cases, the company may offer 0% annual percentage rate (APR) financing as long as you pay off the furniture within the allotted promotional period.
Retail financing can be a great option if you are able to adhere to the terms, but be warned: Interest accrues from the moment you leave the store and can come at a very high rate. If you miss a payment, you could be charged late fees and even have your furniture repossessed.
2. Apply for a personal loan
Personal loans can also be used to finance furniture purchases. These are installment loans where you get a lump sum of cash that you’ll repay in fixed, equal monthly payments over time. You can get personal loans typically ranging from $600 to $100,000. Repayment periods commonly last from 12 to 84 months.
Personal loans are generally best for folks who want quick cash and flexible repayment terms. But you may need good credit and a strong financial profile to get good rates because personal loans are not typically secured by collateral.
If you choose to finance furniture with a personal loan, give yourself time to comparison shop beforehand. Lenders offer different rates and terms and can harbor fees. It’s also a good idea to use a personal loan calculator to determine just how much loan you can afford before you apply.
3. Use a rewards or 0% APR credit card
A quick and easy way to finance furniture can be with a credit card if you have a high enough credit limit. A 0% intro APR credit card may be a good option if you can’t pay for your furniture within one statement period.
You won’t incur any interest during the promotional period, but make sure you’ve repaid your balance before that period ends and the card’s standard APR takes effect. The downside to these cards is that they are subject to credit approval, and you usually need to have good to excellent credit to qualify.
Rewards credit cards can also help you save on your furniture purchase. Depending on your card, you may be able to rack up points or cash back on your purchase. This can be an effective way of reaching the minimum spending requirement for introductory offers.
4. Use a BNPL site or app
Buy now, pay later (BNPL) loans are an increasingly popular furniture financing option. In fact, 34% of consumers would at least consider this option, according to the June 2024 LendingTree BNPL Tracker. This is the highest percentage since October 2023.
With a BNPL loan, you’re able to buy the furniture now and pay it back over time. The loan is between you and a third-party site or app like Affirm, Klarna or Afterpay, not the store where you make your purchase.
These companies pay the store for your furniture, and then you pay the company back per the terms of your BNPL loan.
You’ll typically pay part of the loan at the time of your purchase, then repay the remaining balance in four interest-free installments — usually within a matter of six weeks. However, some BNPL companies also offer monthly installment loans with APRs as high as 36%, so it’s best to pay these off quickly to avoid paying large amounts of interest.
If you’re not able to repay your BNPL loan, you could be subject to late fees, and your debt could be sent to a collection agency. Late payments may also be reported to the credit bureaus and could negatively affect your credit score.
5. Save up and pay with cash
The least expensive way to finance furniture is to pay in cash at the time of your purchase. This method ensures you won’t get hit with interest charges or fees. You may also get peace of mind knowing you aren’t taking on debt to finance your swanky new couch.
But paying in cash isn’t for everyone. It’s best for folks who have considerable savings already. Avoid pulling from your emergency fund and retirement savings because sagging sofa cushions are not an emergency.
You may need to budget ahead of time by cutting expenses to save more money. While this is seldom a fun task, the reward of knowing you didn’t need to rely on anyone else for furniture financing can be well worth the wait.