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Updated on Thursday, January 21, 2021
Furnishing your home can be expensive, and many shoppers find it difficult to cover the cost of doing so. To make these purchases more affordable for the average shopper, many stores offer qualified customers interest-free furniture financing. You also have other options available to you that aren’t offered by stores, like credit cards and personal loans.
How in-store furniture financing works
Many large retail stores offer bad credit furniture financing through store-branded credit cards and “buy now, pay later” furniture installment plans.
It’s fairly common for furniture retailers to offer a store-branded credit card with deferred interest financing plans, where you don’t get charged interest if you pay off the purchase in full within a set number of months. For example, you may be able to purchase furniture on your card and pay 0% APR for six months or longer, depending on the financing plan. But you could be on the hook for the interest you didn’t pay during the financing period — a phenomenon known as deferred or retroactive interest. Further, your APR will jump to 20% to 25% or higher, making repayment more expensive moving forward.
Here are a few examples of store-branded credit cards and their special financing options:
|6 furniture stores that offer financing|
|Retailer||Type of financing||Standard purchase APR||Special financing offer|
|Ashley Furniture HomeStore||Credit card||29.99% Variable||Deferred interest financing on qualifying purchases for six or more months.|
|Bob’s Discount Furniture||Credit card||28.99% Variable||Deferred interest financing on purchases of over $399 for six or 12 months.|
|IKEA||Credit card||21.99% Variable||Zero percent interest for six, 12 or 24 months on purchases of $500 or more for the IKEA Projekt card.|
|Conn’s HomePlus||Credit card||29.99% Variable||Zero percent interest for 48 months on purchases of $3,999 and more.|
|Value City Furniture||Credit card||29.99% Variable||Deferred interest financing on qualifying purchases for six or 12 months. Zero percent interest financing for 36 months with 36 equal monthly payments.|
|Wayfair||Credit card||26.99% Variable||Deferred interest financing for six, 12, 18 or 24 months on orders of $200 or more.|
Other furniture stores with financing options, including Wayfair, may offer point-of-sale loans through third-party companies like Affirm. These loans can come with a fixed APR of up to 30% with a short repayment term. This can be a good option if you prefer fixed payments, can repay the loan over the allotted term and qualify for an affordable APR.
Pros and cons of financing your furniture in-store
In-store furniture financing can be an affordable way to make your purchase — if you can pay off the debt on time. When it comes to store-branded credit cards, you’ll want to avoid deferred interest and the potentially high standard APR by paying off your debt during the special financing period. With point-of-sale loans, make sure the monthly payments and repayment term are feasible as missed payments can damage your credit.
Consider the following pros and cons of using in-store furniture financing before signing up for a new credit account or loan:
|In-store financing: Pros and cons|
You may qualify for 0% APR, if you meet requirements
In-store financing could be a good deal if you pay off the money you borrow within the zero-interest financing period.
For someone who doesn’t have enough savings to cover the furniture, it might make more sense to take advantage of a deal like this instead of tapping into an emergency fund. However, you’ll want to make sure you pay off the total debt before your term ends to avoid retroactively accrued interest.
You can get new furniture right away
With furniture financing available at checkout, you can apply for credit or a loan to pay for the items that you’ve been eyeing, even if you don’t have the cash on hand to purchase them.
The trick here is to make purchases that you can afford to pay off in a short period. Special financing offers on store-branded credit cards may only last six or 12 months, sometimes longer depending on the size of your purchase. Loans like those offered by Affirm may offer loan terms based on your purchase amount, as well.
Help build your credit
Oftentimes, furniture retailers will work with a financial institution that issues in-store credit cards. If these credit companies report on-time payments to one or more of the three credit bureaus, you may find your credit score steadily increasing over time. Check with retailers before you apply for a card to see whether or not you can take advantage of this opportunity.
You may have to pay deferred interest
Store-branded credit cards with 0% APR special financing offers come with deferred interest. That means interest accumulates on your principal during the financing period, starting from your original date of purchase. If you own a credit card with a deferred interest offer and don’t repay your entire principal amount before the financing period ends, you may find yourself owing hundreds of dollars or more in these retroactive interest fees.
Store credit cards have high standard purchase APRs
On top of owing deferred interest going back to the beginning of the date of purchase, the credit card company will continue to charge interest until you repay the full amount owed.
Remember that in-store credit cards carry high interest rates — higher than a typical credit card’s interest — so once the regular APR kicks in and you’re hit with all the deferred interest charges, the charges can rack up rather quickly.
May need good credit to qualify
People with bad credit or no credit might not qualify for furniture financing, since many stores require that you sign up for their partner bank’s credit card in order to do so.
But here’s the thing: Even the act of applying for new credit can temporarily ding your credit score. For that reason, make sure to ask the store if it offers prequalification, an approach that assesses your creditworthiness without conducting a hard credit pull. You can get a good idea of whether you’ll get approved for financing, without hurting your credit score in the process.
Alternatives to in-store financing
Budget, save up cash and pay upfront
If you want to buy furniture, you’ll end up paying for it one way or another. So instead of getting a furniture loan, you might consider saving up the cash to pay for it.
This strategy will keep you from the risk of having to pay high interest retroactively if you can’t repay the loan within the promotional period. You’ll also own your furniture sooner and pay less for it in the process.
Go to a rent-to-own furniture retailer
Rent-to-own furniture stores offer affordable installment payment plans for those who need it. With a rent-to-own plan, you can walk in and buy the furniture you need immediately, and gradually pay for ownership over a predetermined number of weeks or months.
Rent-to-own furniture retailers often don’t require credit checks, and you have the freedom to end your contract at any time. However, rent-to-own payment plans can be much more expensive than if you bought the furniture on credit or cash outright.
If you have other options available to you, you may want to consider them instead as you’ll likely save more money with those choices. However, rent-to-own plans may be a good alternative for those who need furniture immediately but don’t have the cash upfront, or for those with bad or no credit.
Use a credit card with a 0% APR promotional offer
If you’re able to land a credit card with a 0% introductory APR, chances are its terms will be better than the ones a furniture retailer can offer you. Even if you only qualify for a regular credit card, they’ll usually still carry a lower interest rate than retail store cards, which can save you a bundle if you’re left making furniture monthly payments after the promo period ends.
If you’ve got a credit card offer with a 0% percent introductory rate on purchases, compare its regular interest rate with that of the furniture store credit card. Make sure to choose the lower-cost option, in case you cannot pay off the balance by the time the promotional period is up.
Take out a personal loan
You could use a personal loan to finance furniture purchases. This option comes with a set repayment schedule, fixed interest rate and relatively quick approval process. Depending on the lender, you could borrow as little as $1,000 or as much as $50,000 or more.
However, lenders will conduct a credit check on all applicants so you’ll want to have good credit or better to qualify. The best repayment terms are reserved for those with excellent credit, although those with a good credit score can still land attractive offers.
Unlike credit cards, though, you won’t find lenders offering 0% interest on personal loans so you’ll pay more than you would if you paid with cash upfront. To save as much money as possible, carefully weigh the offers you receive and calculate your savings with each before you make your decision.
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