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Is Furniture Financing Worth It?

Read our guide to find out if furniture financing is worth it. We cover the benefits and disadvantages of furniture financing.

Furniture is a major purchase with the average amount spent on a furniture purchase in 2020 being $534.17. Many retailers understand that consumers don’t always have the money in their bank accounts to pay for it and offer financing to allow customers to spread out the payments over a year or more to pay for the furniture. The length of the financial will depend on the retailer.

The furniture financing is offered through a financial service provider. Before allowing you to finance the furniture, they will have you undergo a credit check to ensure that you are reliable enough to pay off the loan. The financing agreement may require you to pay a deposit on the furniture and then a set amount every month. For example, you would put down $79 and then pay $79 each month until the furniture is paid off.

Pros of financing furniture

Financing furniture will allow you to spread out the cost of the payment. It may be a good option for you if you regularly have a smaller amount of extra money in your budget. Furniture financing could also be a good idea if you don’t want to drain your savings and are certain that you can afford the monthly payments. 

The following are some benefits of furniture financing:

  • Smaller payments. You will have multiple, manageable, monthly payments until the furniture is paid off. This may fit your budget better.
  • Establish a payment history. May help you establish a positive payment history if you are just getting started. It gives you the opportunity to prove that you are responsible enough to manage monthly financial payments.
  • Avoid draining saving accounts. Will allow you to purchase furniture without draining your emergency fund or your savings account. 

Cons of financing furniture

Financing furniture does have many downsides, so it is important to consider it carefully. If you fail to make the payments, financing your furniture can hurt your credit score. It can also put you at risk of defaulting on a loan and having the furniture repossessed. 

The following are some downsides to financing your furniture: 

  • May lower your credit score. Having too many loans and credit card accounts has a negative impact on your credit score. A furniture financing agreement in addition to multiple loans and financial obligations may lower it even more. 
  • Lenders may consider you as a risk. Too many loans and financing arrangements may raise a red flag for lenders. You may find it difficult to borrow money when you need it. 
  • Missed payments will negatively impact your credit score. Late and missed payments are reported to credit bureaus. These will have a negative impact on your credit score.
  • Could default on the loan. Too many missed payments will cause you to default on the loan. This will pass the debt on to a collections agency. They may require payment or take your furniture. If the furniture is repossessed and sells less than the loan’s value, you are expected to make up the difference. 

How to avoid furniture financing

There are a few options that will allow you to avoid furniture financing. You can save the money until you can afford it, use a credit card, or buy used furniture that you can afford. These options are usually a better financial choice than financing with your furniture retailer. 

Since furniture is often significantly marked up, buying used furniture from thrift stores will save you a lot of money. There are websites like Craigslist that help you locate furniture that is close to you at the price you want to pay. Some antique furniture will increase in value over time, but even if it doesn’t used furniture is often a good buy and saves a lot of money. 

If you don’t need new furniture immediately, you can create a savings account and set aside some money each month for new furniture. You may want to calculate the amount that the furniture you like will cost and create a savings plan for the furniture. If you set aside the amount, you could potentially have enough money to buy the new furniture in six months to a year. 

Another option is to use a 0% APR credit card to pay for the furniture. This will allow you to make the payments at 0% interest  for the first 24 months and allow you to pay off the debt at your own pace. This option is only recommended if you are disciplined enough to pay off the furniture without being tempted and going further into debt. Often 0% APR cards are only available to people who have good credit. 

Another good alternative to furniture financing from the retailer is an online loan from Jora Credit. Jora doesn’t have prepayment charges and actually encourages early repayment.  Find out if a Jora Credit loan is right for you today! 

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