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Are you moving into a new home or upgrading your existing pad? Outfitting your living space with chairs, couches, tables, and other furnishings can quickly get expensive — especially if you enjoy the finer things in life. But what if you want a nice furniture now, but don’t have enough cash in the bank to buy it outright? That’s where furniture financing can come to the rescue.
It might come as a surprise to some, but it’s certainly possible to finance furniture rather than paying for it all at once. Financing furniture lets you instantly level-up your living space without draining your bank account. But this convenience comes at a cost and might not be best for everyone. (More on that later.)
According to Circle Furniture, the cost to fully furnish a living room in the United States starts at around $10,000 and can go up to $25,000 or more. Couches are generally the most expensive piece of furniture in living rooms, with an average cost of more than $1,000. Rugs can be very expensive as well, especially if you have a lot of flooring to cover. Other items, including tables, chairs, drapes, and lighting, can range from $100 to $1,000 and up.
Depending on your personal taste and how much space you’re working with, the cost to fully furnish your home could range from a few thousand dollars to tens of thousands of dollars. Estimate spending roughly $5,000 for each room in your abode, or up it to $15,000 per room if you insist on getting the best furniture money can buy.
A good rule of thumb is to only spend as much on furniture as you can afford. That said, if you haven’t saved up for a furniture spree, a $5,000 budget is a good starting point for apartments, whereas $15,000 can go relatively far when furnishing a house.
For most people, it’s not a good idea to finance furniture because you’ll almost undoubtedly end up paying significantly more than if you had paid with cash in the first place. Not to mention, the process of financing furniture will also negatively affect your credit score. However, if you are able to find a retailer that offers no-credit-check furniture financing with a 0% interest promotional period, doing business with that company could actually work in your favor.
Opening up a new financing account will always negatively impact your credit score, at least in the short term. The reason for this is threefold:
#1 – When a company conducts a credit check to determine your eligibility for financing, this is known as an inquiry. Inquiries automatically reduce the applicant’s credit score but only by a few points.
#2 – A significant factor in calculating an individual’s credit score is the average age of their open accounts, which includes loans, credit cards, and financing relationships. Opening a new account lowers the average age of accounts, which consequently lowers the person’s credit score.
#3 – By financing your furniture — rather than paying for it upfront — you’ll be taking on a form of debt. Any increase in debt will lower your credit score, especially if you have high balances across several accounts.
Despite the many ways in which furniture financing can harm your credit record, it also has the potential to strengthen your score — but only in the long run. Credit bureaus reward consumers who have a proven history of paying their bills on time, and by opening additional accounts — and keeping each of them in good standing — your credit score will undoubtedly rise over time. So if you have bad credit, furniture financing could actually help you improve your situation.
If you opt to finance your furniture, you’ll likely want to pay off the balance as quickly as possible, or at least in accordance with the terms spelled out in the agreement. However, not all retailers impose a strict deadline regarding when financing arrangement ends. This gives consumers more time to pay for their furniture, but it usually means they’ll be paying exorbitant interest rates.
If you’ve decided to finance your furniture, the first step is to find a retailer that offers guaranteed furniture financing. Many popular home furnishing stores offer financing options, and there are many ways to finance furniture online as well. After you’ve identified the store you like to buy from, fill out a financing application to see if you qualify. If you’re approved, choose the furniture that’s right for you, and be sure to pay your bill on time. It’s that easy!
Hopefully, you now have a better understanding of what furniture financing involves. If you’re ready to start upgrading your home today, explore your options and find a retailer that meets your needs.
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