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Understanding Furniture Loans: A Comprehensive Guide

Purchasing furniture can be a significant investment. Our goal is to help you navigate the world of furniture financing, providing you with detailed insights and options, even if your credit score is less than perfect. From understanding what a furniture loan is, to exploring various financing methods, this guide is designed to empower you with knowledge and choices. We understand that everyone's situation is unique, and our mission is to provide the necessary tools to find the right fit for you.
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The Legal Status of Personal Loans in the USA

In the USA, personal loans are legal and typically used for non-business needs. They must be repaid according to the loan agreement, which includes interest and a repayment timeline. Various laws regulate these loans, including the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, and the Truth in Lending. These laws protect both the lender's interests and the borrower's rights, ensuring fairness and transparency in the lending process.

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Understanding Furniture Loans: A Comprehensive Guide

What are furniture loans?

Furniture loans are a type of a personal loan specifically designed to finance furniture purchases. With furniture loans, individuals can borrow the funds necessary to buy furniture, such as a dining room set or outdoor furniture, without paying the full amount upfront. These loans typically come with fixed interest rates and are repaid through monthly payments over a specified period, usually ranging from 2 to 6 years. Individuals can enjoy their desired furniture immediately by opting for furniture loans while spreading out monthly payment and the total cost over a manageable timeframe.

Features

  1. Monthly Payments. Furniture loans are repaid through fixed monthly payments. This allows borrowers to budget and plan their finances accordingly, as they know the exact amount they need to pay each month.
  2. Multiple Financing Options. Furniture loans provide individuals with various financing options to suit their needs. These options may include different loan amounts, repayment periods, and interest rates, allowing borrowers to customize their loan based on their preferences.
  3. Credit Considerations. While furniture loans are available to individuals with different credit scores, individuals with poor credit may encounter higher interest rates or more limited loan options, as all applications are subject to credit approval. However, some lenders specialize in offering furniture loans to individuals with bad credit or poor credit scores.
  4. Promotional Periods. Some furniture loans may come with promotional periods, during which borrowers can enjoy special financing terms. For example, they may offer zero or low-interest payments for a specific period. It's important to carefully review the terms and conditions of these promotional periods, as they may have specific requirements or deferred interest clauses.

    Pros and cons

    Pros

    Flexibility in Purchasing. Furniture loans provide individuals with the flexibility to purchase the furniture they need or desire without having to pay the full amount upfront. This allows individuals to furnish their homes or make necessary upgrades without straining their budget.

    Accessible Financing Options. Furniture loans are often available to individuals with various credit scores, including those with bad credit or poor credit history. This allows individuals who may have difficulty obtaining traditional loans to still have access to financing for their furniture purchases.

    Convenient In-Store Financing. Many furniture stores offer in-store financing options, making it convenient for customers to apply for a furniture loan right at the point of purchase. This streamlines the process and allows individuals to acquire their furniture quickly.

    Potential Promotional Offers. Some furniture loans may come with promotional periods that offer zero or low-interest payments for a specific timeframe. This can be advantageous for borrowers who can take advantage of these offers and save money on interest payments.

      Cons

      Interest Rates and Financing Fees. Depending on the borrower's creditworthiness, furniture loans may come with higher interest rates than other loans. Additionally, there may be financing fees associated with the loan, which can increase the total cost of the furniture purchase.

      Risk of Debt Accumulation. Taking on a furniture loan means adding another financial obligation to one's monthly expenses. Borrowers need to carefully consider their ability to repay the loan, as defaulting or falling behind on payments can result in financial difficulties and damage to their credit.

      Impact on Credit Score. Applying for a furniture loan involves a credit check, which can temporarily lower the borrower's credit score. Additionally, if the borrower fails to make timely payments or defaults on the loan, it can harm their credit history and credit score.

      Limited Financing Options for Poor Credit. While furniture loans may be available to individuals with poor credit, they may encounter more limited loan options and potentially higher interest rates. This can result in higher overall costs for the furniture purchase.

      Possible Additional Costs. It's important for borrowers to carefully review the terms and conditions of furniture loans. Some loans may have hidden fees, such as origination fees or deferred interest clauses. Understanding the fine print is crucial to avoid unexpected costs and financial surprises.

        How to apply for a furniture loan?

        Apply for a loan

        1. Research Furniture Financing Options. Start by researching lenders or furniture stores that offer specific furniture financing options, such as Ashley Furniture or Snap Finance. Look for lenders or stores specializing in furniture loans or providing in-store financing.

        2. Explore In-Store Financing. Visit furniture stores that offer in-store financing options. Inquire about their financing programs and the specific terms and conditions they offer for furniture loans.

        3. Determine Loan Amount for Furniture Purchase. Assess your furniture needs and determine the loan amount required specifically for your furniture purchase. Consider the total cost of the furniture, including taxes, delivery fees, or any additional charges.

        4. Check Credit Score and Credit Requirements. Check your credit score to understand your creditworthiness. Review the credit requirements set by furniture lenders or stores to see if you meet their minimum credit score or credit history criteria.

        5. Visit Furniture Store or Apply Online. Visit the furniture store or apply online through the lender's website to start the application process for the furniture loan. Provide accurate personal and financial information as required in the application.

        6. Submit Documentation. Submit the necessary documentation requested by the lender or store, which may include proof of income, identification documents, and any other documentation specific to the furniture loan application.

        7. Sign the Loan Agreement. If you agree with the loan terms, sign the loan agreement provided by the lender or store. Make sure to understand all the terms and conditions, including any clauses specific to furniture loans or financing arrangements.

        Requirements and conditions

        1. Promotional Financing Offers. Some furniture loans may offer promotional financing, such as zero-interest or deferred interest for a specified period. It's essential to understand the terms and conditions associated with these promotions, including the consequences if the balance is not paid in full by the promotional period's end.
        2. Minimum Credit Score. Lenders or stores may have a minimum credit score requirement for approving furniture loans. This helps them assess your creditworthiness and determine your lending risk.
        3. Proof of Income. You may be required to provide proof of income, such as pay stubs or bank statements, to demonstrate your ability to repay the loan.
        4. Employment Verification. Lenders may verify your employment status to ensure a stable source of income.
        5. Identification Documents. You will likely need to provide identification documents, such as a valid ID or driver's license, to verify your identity.
        6. Down Payment. Some furniture loans may require a down payment or an initial deposit, especially if you have a lower credit score or if the loan amount is significant.

          Best places to get a furniture loan today 28.02.2024

          Synchrony Financial

          Apply for a loan

          Synchrony Financial is a leading provider of consumer financial services. They have partnered with numerous furniture retailers to offer store credit cards and financing programs specific to furniture purchases. These programs may include promotional financing offers, such as deferred interest or zero-interest for a certain period.Synchrony Financial

          TD Bank

          Apply for a loan

          TD Bank is a well-known financial institution that has offered personal loans, which can be used for various purposes, including furniture purchases. Their personal loan options may feature competitive interest rates, fixed monthly payments, and flexible loan terms.TD Bank

          LightStream

          Apply for a loan

          LightStream is an online lending division of SunTrust Bank (now Truist). They offer unsecured personal loans with competitive interest rates and flexible repayment terms that can be used for a variety of purposes, including furniture purchases.LightStream

          Upstart

          Apply for a loan

          Upstart is an online lending platform that utilizes alternative data and artificial intelligence to provide personal loans. They offer fixed-rate loans that can be used for various purposes, including furniture financing.Upstart

          State Employees' Credit Union

          Apply for a loan

          SECU is a credit union based in North Carolina, serving state employees and their families. They provide personal loans with competitive rates that can be used for different purposes, including furniture purchases.State Employees' Credit Union

          Ways to receive the money

          1. Store Credit. In cases where the furniture loan is specifically tied to a particular furniture store or retailer, the loan amount may be provided in the form of store credit. This allows borrowers to use the credit for purchasing furniture at the designated store.

          2. Direct Deposit. The loan funds can be directly deposited into the borrower's designated bank account. This method offers convenience and quick access to the funds, as they are electronically transferred to the borrower's account.

          3. Check. Some financial institutions may issue a check for the loan amount, which can be mailed to the borrower's registered address. The borrower can then deposit or cash the check as per their preference.

          How to repay a furniture loan?

          1. Understand the Loan Terms. Familiarize yourself with the interest rate, repayment period, and associated fees.

          2. Create a Budget. Evaluate your income and expenses to determine how much you can allocate for loan repayment.

          3. Pay More Than Your Minimum Payment When Possible. Whenever you have extra funds, consider paying more than the minimum to reduce the principal balance faster.

          4. Prioritize Loan Repayment. Allocate resources towards the loan over non-essential expenses.

          5. Avoid Additional Debt. Minimize new debt while repaying the loan to maintain financial stability.

          6. Track Progress. Monitor the loan balance and repayment to stay motivated and on track.

          7. Communicate with the Lender. If difficulties arise, discuss potential solutions or payment arrangements with the lender.

          Things to pay attention to

          1. Promotional Periods. If the loan includes a promotional period, understand the specific terms and conditions. For example, if there is a zero-interest promotional period, determine the duration and what happens when it ends.
          2. Credit History. Consider your credit history, including any past credit issues or delinquencies. Some lenders may be more willing to work with borrowers who have poor credit or limited credit history.
          3. Repayment Capability. Assess your ability to repay the loan based on your income and financial obligations. Ensure that the monthly payments fit comfortably within your budget to avoid financial strain.
          4. Financing Fees. Be aware of any financing fees associated with the loan. Some lenders may charge origination fees or other fees that can add to the total cost of borrowing.
          5. Down Payment. Check if the loan requires a down payment. Some lenders may require a certain percentage of the furniture's purchase price as a down payment, which can affect the overall loan amount and monthly payments.

            Alternatives

            Apply for a loan

            1. Personal Loans. Instead of specifically applying for a furniture loan, borrowers can opt for a personal loan. Personal loans can be used for various purposes, including furniture purchases. They often have flexible terms, competitive interest rates, and can be obtained from banks, credit unions, or online lenders.

            2. Credit Cards. Using a credit card company to finance furniture purchases is another alternative. Many furniture stores offer store credit cards with special financing options, such as zero-interest promotional periods. Existing credit cards with available credit can also be used to make furniture purchases. However, it's important to be mindful of interest rates and payment terms to avoid accruing high interest charges.

            3. Layaway Plans. Some furniture stores offer layaway plans where customers can reserve the furniture they want by making a series of payments over time. Once the full payment is made, the furniture is released to the customer. Layaway plans can be a good option for those who prefer to make incremental payments without taking on debt.

            4. Lease-to-Own Option. The lease-to-own option is an alternative method to finance furniture that provides individuals with the flexibility to acquire items they need without making an immediate upfront payment. With this option, individuals can lease furniture for a predetermined period, typically ranging from 12 to 36 months, and have the opportunity to purchase the items at the end of the lease term.

            5. Home Equity Loans or Lines of Credit. If you own a home, you may consider using a home equity loan or a home equity line of credit (HELOC) to finance your furniture purchases. These options leverage the equity in your home and typically offer lower interest rates compared to unsecured loans. However, it's important to carefully assess the risks and obligations associated with borrowing against your home.

            Editorial opinion

            When considering furniture financing options, it's crucial to carefully assess your financial situation and weigh the pros and cons. One option that stands out is lease-to-own financing. With this option, individuals can acquire furniture gradually while making monthly payments. However, it's important to note that lease-to-own financing may involve higher overall costs due to interest rates and fees associated with the lease agreement. Additionally, credit approval is often required, making it essential for borrowers to have a good credit score or seek alternative options. Paying cash for furniture purchases is generally the most financially sound approach, as it allows individuals to pay cash and avoid paying interest and accumulating debt. It also provides more bargaining power and eliminates the risk of defaulting on payments. However, not everyone may have the means to pay upfront in cash for expensive furniture items. For those who opt for financing, it's crucial to explore the best furniture financing options available. This involves comparing interest rates, payment plans, and promotional periods. Some financing methods may offer zero or low-interest rates for a limited time, but it's important to read the fine print and be aware of when the promotional period ends. Otherwise, borrowers may face steep interest charges once the promotional period concludes. It's advisable to choose trustworthy lenders with an interest rate and transparent terms and conditions. Automatic payments can be a helpful tool to ensure on-time payments, avoiding late fees and maintaining a good credit score. However, borrowers should be cautious about unsecured loans with high interest rates, as they can lead to financial strain. In summary, while furniture loans can be a viable option for acquiring new furniture, individuals should carefully evaluate their financial circumstances, creditworthiness, and other alternatives such as paying cash or seeking assistance from family members. Being aware of the interest rates, payment terms, and credit requirements can help borrowers make informed decisions and avoid unnecessary debt.

            Important

            Keeping your Debt-to-Income (DTI) ratio below 30-40% of your monthly income is crucial. This will help you avoid potential financial problems in the future. Additionally, always assess the necessity and feasibility of taking a loan, ensuring you can comfortably manage its repayment.

            How to choose a lender

            1. Make sure to confirm whether the lender is licensed to operate in your state. You can verify this information with your state regulator or attorney general.
            2. Check if the lender is a member of a reputable association, such as the Community Financial Services Association of America. Membership in such organizations may provide an extra level of reliability.
            3. Carefully review all the terms and conditions of your loan contract.
            4. Thoroughly examine the interest rates and ensure that your contract includes a detailed breakdown of the total cost of the loan.
            5. Take advantage of your right of rescission. Usually, you can rescind the loan within three days after signing the agreement. Alternatively, there is typically a "cooling-off" period, which allows you several days to thoroughly review the contract before making an informed decision to enter into a consumer loan agreement based on the terms specified by the lender.
            6. Choosing a lender is a significant decision that demands careful consideration and a good understanding of how such organizations operate.

            Methodology

            At Finanso, we've carried out a comprehensive analysis of over 100 lenders, assessing them based on 35 different parameters across six key categories: accessibility of loans, customer relations, quality of service, interest rates, and transparency of conditions.

            In each category, we carefully considered the most critical factors in selecting a lender. These factors include the interest rates, available loan amounts, minimum credit score, minimum income, application fees, and the speed at which funds are transferred.

            At Finanso, we highly value our users, which is why we also focus on the quality of customer service, user reviews, and additional features that can aid our users in making a well-informed decision.

            Our ultimate goal is to provide insightful recommendations and expert advice to assist you in selecting a lender that best caters to your specific needs.

            Additional resources

            To learn more about furniture loans and best practices, check out some of the following resources:

            Sources

            FAQ

            Is it hard to get a loan for furniture?

            Getting an unsecured loan for furniture can vary depending on your creditworthiness and the lender's requirements. If you have good credit, a stable income, and a positive credit history, qualifying for a furniture loan may be easier. However, if you have bad or poor credit, securing financing may be more challenging, and you may need to explore alternative options or improve your credit before applying.

            What credit score do I need to finance furniture?

            The credit score needed to finance furniture can vary among lenders. Generally, a good credit score of around 670 or higher is desirable to qualify for favorable loan terms and interest rates. However, some lenders may offer financing options for individuals with lower credit scores, but they may come with higher interest rates or stricter terms.

            Can I finance furniture with bad credit?

            Yes, it is possible to finance furniture even with bad credit. While bad credit may limit your options and result in higher interest rates, lenders and financing programs are still specifically designed for individuals with poor credit scores. These lenders understand that credit challenges can happen and may be willing to extend loans to help you purchase the furniture you need. It's important to research and compare different lenders, explore alternative financing options such as lease-to-own or rent-to-own programs, and be prepared for potentially higher interest rates and stricter terms. Additionally, working on improving your credit over time can open up more favorable financing opportunities in the future.

            How many months can you finance furniture?

            The number of months you can finance furniture depends on the lender and the financing program. It can range anywhere from a few months to several years. Common financing terms for furniture purchases range from 12 to 60 months. It's important to consider your budget and financial situation to determine the most suitable purchase amount and repayment period.

            What methods of payment are available for furniture?

            When it comes to payment methods for furniture, various options are typically available. These can include:

            1. Cash or Debit Card. Many furniture stores accept cash payments or payments made using a debit card.

            2. Credit Cards. Most furniture stores accept major credit cards for payment. This allows you to make the purchase and then pay off the balance over time. However, be mindful of the interest rates and fees associated with credit card payments.

            3. Financing Programs. Furniture stores often partner with financing institutions to offer specific financing options. These programs may allow you to make monthly payments over an agreed-upon period, often with promotional periods and interest rates.

            4. Store Credit Cards. Some furniture stores offer their own store credit cards, which may come with special financing offers, such as zero-interest promotional periods.