What is furniture financing?

When you buy new furniture, you have an opportunity to express your individual style. Will you make a statement with a green velvet sofa or opt for minimalist or mid-century modern pieces? Choosing new furniture is fun, but finding room in your budget can be stressful, especially if you're starting from scratch - the average cost to furnish a home is about $16,000, according to HomeAdvisor.

Fortunately, there are several furniture financing options that can help spread out the cost over time, which may be especially helpful if you already wiped out your savings on a down payment. Even if you're renting your first apartment or have bad credit, there are ways to pay for the furniture you need. Let's explore your options.

Ways to finance furniture

Each furniture financing option comes with its own requirements, costs, benefits, and drawbacks. To help you narrow down your options, we'll cover each furniture financing solution in greater detail below.

In-store financing and store credit cards

Best if you're getting most of your furniture from the same place

Many furniture retailers offer special financing through store credit cards. For example, Ashley offers no-interest financing for up to 72 months on select purchases, Wayfair offers 0% APR when you pay off your balance within 24 months, and Amazon offers zero-interest periods of up to 24 months on select purchases.

At each store, you'll often need to spend a minimum amount to qualify for the promotional APR. You'll also need to repay the balance in full before the promotional period ends, or you could owe deferred interest. Deferred interest means you wipe out any savings you would have received from the 0% APR - you would owe interest from the purchase date based on the initial purchase amount at the card's standard APR.

Due to the minimum spend requirements, store credit cards are best for people getting the majority of their furniture from the same store. Additionally, a store credit card won't be the best way to go if you need a longer repayment term. Store cards can be easier to qualify for than traditional credit cards, but they often have higher rates and fees outside of the promotional period.

Some stores also offer installment loans through financing partners, which are very similar to (or the same as) traditional personal loans.

Personal loans

Best if you want a years-long repayment term without providing collateral

A personal loan offers a lump sum of cash in exchange for equal monthly payments over time. Personal loans are typically unsecured, which means you won't risk losing an asset if you fail to repay, but missing a payment can still harm your credit. While personal loans don't come with an interest-free period or a grace period, they come with longer terms (often up to 7 years) and have fixed APRs that are lower than credit cards, on average, particularly if you have good credit.

Another advantage of a personal loan is that you can use the funds for almost anything. Not only can you get your couch from Wayfair and your coffee table from Amazon, but you can also use some of the money for another purpose entirely, like refinishing your floors. However, you may face stricter credit score and income requirements with a personal loan than with some other financing options.

Credit cards

Best if you can manage a short repayment term, are racking up rewards, or are buying furniture over time

Credit cards come with higher APRs than personal loans on average. However, credit cards typically come with a 21-25 day grace period (without interest), and many offer rewards such as cash back or travel points. If you'll have enough cash by the time payment is due, using your existing credit card can be a good strategy.

If you need more time, consider applying for a new credit card with a 0% introductory APR offer, assuming you can qualify with your current credit score. Look for cards that offer a 0% APR for 12 to 15 months on new purchases in addition to a cash bonus for spending a certain amount. You'll also have the flexibility to use the card at most retailers.

Just make sure you can pay the balance within the promotional period, or you'll owe the card's standard APR on the remainder. While many non-store credit cards don't charge deferred interest, it's best to confirm that so you're not surprised with high interest charges once the promotional period expires.

BNPL

Best if you can cover furniture costs out of your next paycheck

"Buy Now, Pay Later" providers typically offer both a short-term and long-term financing option, with key differences. The standard short-term option typically allows you to make four payments over the course of six weeks - one upfront, the remaining three, every two weeks thereafter. Plus, pay-in-four plans may only require a soft credit check and don't come with any interest charges.

The long-term option is less attractive - it works like a personal loan with fixed monthly installments. Depending on your credit score, you may pay up to 36% APR, and a hard credit pull may or may not be required. If you need more than six weeks to pay for your purchase, you may get a lower rate and more flexibility with the funds if you apply for a personal loan from an online lender, bank, or credit union. However, some people enjoy the convenience of applying for BNPL during checkout.

Rent to own

Best if you need furniture now but don't want to take on any new debt

Rent-to-own financing is not a loan, but rather a lease contract - you won't own the furniture until you've paid the full balance according to the terms of your agreement, and you can return the furniture if you can't keep up with the payments. You can often get approved with no credit history and you won't risk damaging your credit, but rent-to-own agreements can also be risky and costly.

Depending on how quickly you can cover the cost, you may pay the same price as a cash purchase, or you may pay as much as twice the cost of the furniture you buy due to fees and cost markups. Rent-to-own financing is available directly from rent-to-own stores like Rent-a-Center or from leasing companies like Acima, which can allow you to lease furniture from a selection of retailers.

If you'll need more than six months to pay for your furniture, you'll be better off choosing another financing option, assuming you can qualify.

Layaway

Best if you can wait to receive your furniture, don't want to borrow money, and need an incentive to save

Layaway programs are not loans, and they often don't come with interest charges, although there may be an opening fee and downpayment required. But your furniture won't be delivered until you've paid for it in full. There may even be a cancellation fee if you change your mind. Most programs also require that you pay over a relatively short period, such as 8-12 weeks.

If you don't need your furniture now, you're probably better off saving money in a high-yield savings account or CD than participating in a layaway program. You won't need to worry about fees or down payment requirements, and your savings will grow as it earns interest. However, some people like layaway programs because they force self control. If you're worried you might spend your savings on other things when you really need furniture, a layaway program could be a good fit for you.

Home equity loan or HELOC

Best if you have sufficient home equity and are willing to use your home as collateral

Home equity loans and home equity lines of credit (HELOCs) allow you to borrow against your home equity, or the portion of your home that you own free and clear. But either option can have high upfront costs, so they're best if you need to finance a lot of furniture or are shopping for expensive pieces. You'll also need sufficient equity in your home to qualify - at least 20% available equity, but ideally more. Because of the equity requirement, new homeowners are often better served by personal loans or other options.

There's also the risk of foreclosure if you fail to repay the loan, since home equity loans and home equity lines of credit are secured by the property. However, you can often enjoy a lower APR and a longer repayment term, which may be ideal if you're planning to spend a lot on furniture.

No credit check furniture financing

If you want to finance your furniture purchase without a credit check, you have a couple of options. You can compare the features below. Note that BNPL may require a soft credit check, which won't hurt your credit score.

Bad credit furniture financing

Depending on your credit score, you may have access to some or all of the options below. Note that when applying for a personal loan, you can improve your chances of approval with bad credit by applying with a cosigner or co-applicant or by opting for a secured loan.

FAQ

Should you finance furniture?

It's almost always better to save money in advance of a purchase than to borrow money and pay finance charges. Occasionally, a credit card with an intro bonus or rewards may be more financially advantageous than saving money in an interest-bearing account. Additionally, if you need furniture now but don't have the funds, you'd probably rather pay interest than sleep on the floor - just make sure to compare your options carefully and choose a furniture financing method with minimal costs.

Which furniture stores offer financing?

Most popular furniture stores offer financing, including Amazon, Wayfair, Ashley Furniture, Value City Furniture, Furniture Row, West Elm, IKEA, Bob's Discount Furniture, and others. Furniture retailers may offer store credit cards, BNPL, personal loans through lending partners, rent-to-own options, or some combination of these financing options. Some options may only be available in-store.

Where can I finance furniture?

With a home equity loan, HELOC, or personal loan from a direct lender, you can finance furniture from any retailer. You can also use a credit card at most retailers. Some retailers also offer financing options that can only be used for your purchase in that store, such as a store credit card, BNPL, or layaway.

Does financing furniture build credit?

Financing furniture may help you build credit, but it depends on which financing option you choose. For example, using a layaway program, BNPL, or rent-to-own financing may not have any impact on your credit. However, credit card issuers and lenders typically report your payment activity to the three major credit bureaus, which can help you build credit if you make your payments on time and don't rack up a huge balance.