Best Loans for Furniture

Furnishing a house or apartment can be a costly endeavor. In fact, from 2020 to the present, the cost of furniture and bedding has risen by a shocking 17.6%. Obtaining loans for furniture may be your best option, but not all loans work the same way. 

Compare today’s best furniture loans and learn how you can maintain your home as well as your budget.

MoneyLion offers a service to help you find personal loan offers based on the info you provide, you can get matched with offers for up to $50,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you. You use the loan funds to buy the furniture you need. MoneyLion is here to help. 

How do furniture loans work?

Furniture loans allow you to finance a piece of furniture over time rather than paying for the item upfront in cash. These financing options could allow you to buy a new bed or couch and make regular payments for the duration of the loan, which can include interest. 

Top furniture financing choices

If you’re short on cash but need a piece of furniture, you could deplete your hard-earned savings account or ask friends to loan you money to buy it. If these aren’t options, furniture loans allow you to reduce or eliminate the upfront cost. Here are some of today’s best loans for furniture.

1. Personal loans

Personal loans are unsecured loans that provide a lump-sum cash payment. You’ll repay the loan over time along with interest, with rates typically ranging from 3% to 36%. Preference is given to applicants with strong credit (690 or higher), but some lenders may still work with scores as low as 560. 

Pros

Personal loans offer the following benefits:

• You can use the loan for other purchases.
• They may offer lower interest rates than credit cards.
• There is typically no collateral required.

Cons

Personal loans also have some drawbacks:

• There is a potential for high annual percentage rates (APR).
• Some lenders may charge origination fees.

2. In-store financing

Some furniture retailers offer in-store financing, including 0% APR for a promotional period. If you can pay your furniture off before this promotional period ends, you likely won’t be adding to the cost of the furniture when you buy it depending on the in-store financing offer. 

A credit check is usually required. Minimum scores depend on the store itself, but many retailers offer financing even to those with credit scores in the 500s.

Pros

In-store financing offers several advantages:

• Low (sometimes even 0%) promotional APR.
• Flexible credit requirements.
• Simple payment plan, since you’re paying to the same store.

Cons

Before you commit to in-store financing, consider these drawbacks:

• Interest rates can be high after the promotional period ends.
• Late or missed payments may forfeit the promotional APR.
• It typically requires a credit history to qualify. 

3. Credit cards 

For those with good to excellent credit, a consumer credit card can help you purchase new furniture. While some card issuers will work with those with bad credit, the most favorable terms will go to those with scores of 700 or above. Simply fill out the application and then undergo a credit evaluation before receiving your card.

Pros

Credit cards offer the following benefits:

• Built-in purchase protection.
• Possibilities for rewards points with some credit cards.
• Possible promotions or promotional rates for some new cards, including 0% APR.

Cons

Conversely, here are some reasons to be cautious about credit cards:

• The best interest rates go to those with strong credit, so if your credit score needs work, you might see higher rates in credit card offers.
• Interest rates may be higher than with other financing options.
• You might be tempted to use the card for other things, possibly resulting in overspending, making it hard to manage debt.

4. Payday loans

Payday loans are commonly marketed as “cash advance” loans, offering you small amounts of money ($1,000 or less) based on your paycheck. This can be an option for cash-strapped consumers, perhaps due to an emergency for example especially since payday lenders don’t usually perform a credit check. 

However, payday loans are notorious for high interest rates — sometimes as much as 400%. This can significantly impact the overall cost of your furniture.

Pros

Payday loans offer the following benefits:

• Typically they offer an immediate payment
• Usually, no credit check required
• Lenders may offer same-day payment

Cons

However, there are reasons consumers avoid these loans for furniture:

• They carry unusually high interest rates compared to personal loans.
• Since lenders don’t report payment data, payday loans won’t build your credit.
• High interest rates could increase the chances of not being able to pay the loan back, which could lead to collections or garnishments

5. Secured loans

To get a secured loan, you offer another asset as collateral. For instance, you use your car, house, or other assets to secure the loan. This may make it easier to get a loan if your collateral is sufficient. Your credit score typically has less weight compared to unsecured loans. However, failing to repay the loan may result in you losing the assets you offered as collateral

Pros

Secured loans offer several advantages, including:

• Typically less focus on your credit history.
• Typically lower interest rates than unsecured loans because assets are offered as collateral.
• Possibly longer payment terms, which result in lower monthly payments.

Cons

There are several dangers of a secured loan for furniture:

• You may lose your collateral if you don’t repay the loan on time.
• Secured loans may involve fees upfront.
• There’s typically a longer application process.

6. Home equity loans

If you’re a homeowner, you can tap into the equity you’ve built in your home in the form of a lump-sum cash payment. Equity is your home’s current market value minus your remaining mortgage. Lenders may allow you to borrow up to 80% of your home’s equity, though it typically still requires a strong credit score and there are often associated closing costs as well.

Pros

Home equity loans offer several benefits:

• You can get large, lump-sum payments.
• These loans typically have low, fixed interest rates between 8% and 13%.
• Home equity loans can often be used for other purposes.

Cons

However, there are some reasons you may not want a home equity loan:

• The loan size may be more than you need.
• Closing costs and fees typically apply.
• This generally increases your mortgage payment.

7. Home equity line of credit (HELOC)

A home equity line of credit will give you access to a revolving line of credit, much like a consumer credit card. The best rates and terms go to consumers with strong credit, but this can be a great option for home improvement projects that don’t have a well-defined budget.

Pros

A HELOC offers the following advantages:

• Typically flexible financing options
• It can be useful for other home improvement projects
• The interest rates offered may be appealing compared to other options

Cons

HELOCs have drawbacks that include:

• Variable interest rates that fluctuate over time (fixed rate plans are rare)
• Potential to rack up high debt that must be repaid, similar to a high credit card bill.
• Your house could be lost if you can’t repay the HELOC

8. Payday alternative loans

Payday alternative loans (PALs) are typically offered by federal credit unions as an alternative to payday loans. Most lenders will work with those with bad credit. Unlike payday loans, lenders will report your payments to consumer credit bureaus to help you build credit. 

Pros

PALs provide the following benefits:

• Regulation by the National Credit Union Administration (NCUA)
• Flexible options are sometimes available for those with low credit
• Opportunity to build credit

Cons

PALs also have disadvantages, such as:

• The loan amounts offered are usually small
• You usually have to be a member of a credit union
• There may be an application fee

9. Peer-peer lending

Peer-to-peer (P2P) lending leverages web-based technology to lend money between peers, bypassing traditional lenders. Borrowers typically must undergo a credit check, but lenders can extend loans even to those with low credit. 

Pros

P2P lending provides:

• Flexible options are often available for borrowers with low credit
• Typically fast, convenient lending options
• Typically lower interest rates compared to traditional options

Cons

For borrowers, P2P lending still brings risks, such as:

• High origination fees (may depend on the lender)
• Higher rates generally offered to those with poor credit

Find funding that suits you

Furniture loans empower consumers to buy furniture without incurring a major upfront expense. Depending on your loan option, you may be able to fund your purchase without significantly increasing your costs. Just make sure to compare loan terms carefully to find the option that fits your budget, credit score, and needs.

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