Need financing to purchase household goods? Learn how you can qualify and what financing options are available.
Every family has a household to maintain and every household needs equipment and furniture such as fridges, ovens and sofas. But sometimes you may not have the funds available to purchase or replace these household goods.
In this case, there are many financing options available to help. These options include in-store financing from the same shop you plan to buy your household goods from. Also, banks and credit unions offer term loans you can use to purchase equipment and furniture. In addition, there are interest-free loans that you may qualify for.
Short-term loan options for household goods
What types of loans are available?
In general, you may be eligible to qualify for the following types of financing if you’re looking to purchase household goods:
- Personal loans. These are traditional loans offered by financial institutions, usually banks and credit unions. Personal loans are disbursed up-front as a lump-sum payment and the borrower would pay back the loan, plus interest and other fees, based on a fixed monthly repayment schedule over the term of the loan, anywhere from one year to seven years or more.
- Short-term loans. These work similarly to personal loans except short-term loans require the borrower to pay back the loan within a shorter period of time, usually anywhere from three months to one year. This means the eligibility requirements for short-term loans may be more stringent than other types of financing.
- Interest-free loans. If you are on a low income or receive Centrelink benefits, you may be eligible for interest-free loans from Good Shepherd Microfinance, as a part of the No Interest Loans Scheme (NILS) service. You may qualify for anywhere between $300 and $1,200 and no interest is charged.
- In-store financing. In-store financing is offered directly through the company or store you want to buy your household goods from. There are also credit cards that offer particular in-store financing options such as Gem Visa, GO MasterCard, and a variety of HSBC credit cards.
How much can I borrow?
How much you can borrow depends on several factors. The first factor includes the worth of the household goods you’re buying. For instance, fridges and sofas can range anywhere from a few hundred dollars to a couple of thousand dollars. The same goes for other household items such as computers and entertainment centres.
Secondly, each type of financing has its own minimum and maximum loan amounts. Personal and short-term loans are usually flexible and you may be able to borrow anywhere from a few hundred dollars to $10,000 or more. On the other hand, interest-free loans from the NILS service only allow between $300 and $1,200 and require you to use that money specifically for household-related goods and expenses.
For in-store financing, the amount borrowed would depend on the particular company you’re borrowing from and would be restricted to only those household goods you actually purchase (unlike personal and short-term loans).
How to compare loans for household goods
Keep in mind the following factors when comparing your different options:
- Loan amount. This is the actual amount disbursed to you. Keep in mind that the lender may not actually approve the entire loan amount you requested. They take many factors into consideration such as what you need the money for, past borrowing history and income.
- Interest rates.Be very aware of the interest rate when you’re comparing your options, and whether it’s a fixed or a variable rate. For variable rates, make sure you’re able to make repayments if the rate happens to spike upwards during the life of the loan.
- Fees. Depending on the type of financing, be aware of any one-off fees such as application fees and early repayment penalties. Also, be aware of any ongoing charges such as monthly or annual fees.
- Repayments. No matter what type of financing you opt for, make sure you know what the repayment terms are, and if you’ll be able to meet your repayments on-time. Repayments may include fixed monthly repayments for lump sum loans or variable payments for revolving lines of credit. Also, check to see if your lender offers any repayment flexibility.
- Secured vs unsecured. Your lender may require collateral to be put up as security for your loan. For instance, you may be required to put up home or business equity in order to qualify for your loan.
How much does a household goods loan cost?
- Personal loans. These loans include fixed or variable interest rates charged on the principal balance. They also may include one-off and on-going fees such as application fees.
- Short-term loans. Like personal loans, you’d be charged an interest rate on the principal balance of the loan along with certain fees.
- Interest-free loans. These special-situation loans charge no interest. You’d only be responsible for paying back the loan amount you borrowed. For loans received from Good Shepherd Microfinance, there would be no fees.
- In-store financing. The total cost depends on a variety of factors such as the particular store or company you’re buying your goods from. Some stores offer zero or low-interest financing while they may or may not charge you fees. Also, there are certain credit cards that offer in-store financing so check with your particular credit card to see what rates and charges are offered.
Is there anything to consider before applying?
- Getting into too much debt. It’s easy to fall into too much debt so make sure you’re able to pay back any loan you apply for. Also, make sure to never borrow more than what you actually need.
- Applying for too many loans. Another pitfall to avoid is applying for too many loan products within a short period of time. Lenders can see how many times you’ve applied for loans, so if you’ve been applying for several loans in the span of a few days, they may consider this as irresponsible borrowing. Also, being rejected too many times for credit products may negatively impact your credit score.
Frequently asked questions about financing household goods
Will I qualify?
This depends on the particular requirements set out by the lender. The criteria for each lender would be listed on the review pages of finder.com.au and you can confirm by clicking on “Go to Site”. In all cases, you’d generally need to be older than 18 years of age and be an Australian citizen or permanent resident. However, there are loans available for temporary residents.
Can I qualify with bad credit?
This depends on the particular lender and loan type, but there are a variety of lenders that offer loans to bad-credit applicants. However, the rates and fees on these loans are usually expensive. To avoid this, you can try offering collateral to your lender as security for the loan or have a loan guarantor on your application.
Can I use the funds for things besides household goods?
Personal and short-term loans are usually flexible for how you’d use your funds. However, with low-interest or interest-free loans, you may be restricted to using your funds strictly for household goods and expenses.