Aside from your home and car, furniture is one of the most expensive things you will buy. Furniture loans exist to enable you to spread out the cost of furniture over a longer period of time, alleviating the financial burden of the purchase. Below, we look at how furniture loans work and how you can get them before looking at some alternatives. By the end, you should have all the information you need to decide if a furniture loan is right for you.
What is a furniture loan?
Simply, a furniture loan is a personal loan that you can use to purchase furniture. You will need to explain to your loan provider what you’re planning to do with the money they give you, so it’s important to make the distinction. You should note that furniture loans are different from home improvement loans, as the latter is used for things like kitchen upgrades, new windows, and other things projects that add value to your property. You can apply for two types of personal loans – secured or unsecured. The latter is more attractive to borrowers, as you don’t need to offer an asset to the lender as security.
How does a furniture loan work?
Just like all personal loans, furniture loans are simple, transparent, and easy to apply for. You can apply online, and you usually hear back within 24-48 hours of completing the form. You will receive a fixed amount of money to buy furniture that will be deposited into your bank account. Specified in terms of the loan will be the repayment period, during which you will need to pay back the agreed amount at regular intervals, as well as interest. Helpfully, the rate of interest on a personal loan for furniture is set in advance, so you can easily manage your repayments.
Is a furniture loan right for you?
Lots of people turn to their savings when making a big purchase, which is understandable. But not everyone has enough in the bank to cover the costs. Furniture loans are a great option for anyone who doesn’t have enough cash to pay for a purchase outright. However, don’t mistake unsecured furniture loans as an opportunity to live beyond your means. You should only buy items that you can afford to pay back. Unsecured loans just allow you to spread out the cost of paying for something, which is ideal for staying in control of your finances. Before committing to a furniture loan, make sure you actually need the item you’re borrowing money for and ensure you can afford the monthly repayments.
A furniture loan can be used for any type of furniture for your home, including sofas, armchairs, tables, chairs, beds, outdoor furniture, designer furniture, shelving, and anything else you can think of. This is one of the reasons that personal loans are so attractive, as you can use them for most things (within reason). They’re flexible and easily accessible, which makes them attractive to many borrowers.
Furniture loan alternatives
Of course, applying for an unsecured personal loan isn’t the only way to pay for furniture. Some of the alternatives available to you include:
- Cash savings: If you’ve managed to save up enough cash in your bank account, you could use it to fund an expensive furniture purchase. We would just advise you not to clean out your savings entirely, as it’s important to have some money available for a rainy day.
- Credit card: Some people use credit cards to fund expensive furniture purchases. While this is an option available to you, interest rates can be high, particularly following a 0% interest period. When you’re not required to pay back money every month, it can be tempting to roll the repayments over and pay the minimum required. Of course, this isn’t great for your long-term financial health.
- Store credit: Depending on the store that you’re buying the furniture from, you might be able to access store credit to fund your purchase. You will be required to pay for the item in instalments, and you may even find that you don’t pay any interest.
- Budgeting loan: If you’re receiving benefits from the government, you might be eligible for a budgeting loan. If you meet the criteria and are looking to make a relatively inexpensive furniture purchase, this could be a great option for you.
Now that you’re clear on the different ways you can purchase furniture, it’s time to decide which is the best option for you. If you think that a personal loan is an ideal way to complete a purchase, use Koyo Loans’ Loan Calculator to find out how much you’re likely to pay back over a certain period of time if your application is successful.