Looking to turn your house into a comfortable home? Find out how you can get a loan to purchase furniture.
A furniture loan is a loan that is used to furnish your house, update old furniture or get some new shelves that you’ve been eyeing. Depending on the lender, you are able to apply for a furniture loan with bad credit or if you are on Centrelink payments.
Some options that you can choose from when considering a furniture loan include unsecured personal loans and short term cash loans. How much you are able to receive through these options depends on the lender, but can go as high as $8,000.
What options do I have for a furniture loan?
Some choices for you to consider when looking into a furniture loan include:
- Unsecured personal loans. This loan types means that you don’t have to put forward an asset as security in order to be considered for the loan. However, the rates will be higher as there’s risk to the lender. You can borrow a minimum of $3,000 and a maximum of $100,000. Rates start from as low as 6.99% p.a. and go up to 14.99% p.a. The comparison rates start from 7.69% p.a. and end at 16.42% p.a.
- Peer-to-peer loans. These are loans that involve borrowing money from individual investors through a third-party. You benefit from low tailored rates as well as an online application process. The amount you are able to borrow starts from $2,000 and goes as high as $50,000. Depending on your credit position and how much you’re looking to borrow, the rates can be as low as 4.99% p.a.
- Interest-free finance. Interest-free finance means that you receive credit from a third party provider to make your purchase, and pay off your purchase in installments. Popular providers, such as Afterpay and zipMoney, let you know your payments and the time it will take you to pay off your purchase in the application. However, there are fees and interest charges for late payments.
- Short term loans. This loan type is a form of credit that you can apply for when you fall short of money. You are able to borrow any amount up to $5,000. Keep in mind that short term loans or "payday loans" charges steep fees including an establishment fee, which can be calculated to as much as 20% of the amount you’re asking to borrow. This loan is an option to consider if you need furniture fast.
Personal loans to consider for furniture purchases
Which type of furniture loan is right for me?
Before applying for a furniture loan, look at the following points and consider whether or not it meets your needs:
- Eligibility criteria. Some loans don’t allow you to apply if you have bad credit. Other lenders will accept you if you are on Centrelink. Ensure you meet the eligibility requirements before applying.
- Borrowing amount. Some lenders only allow you to borrow $2,000 on short notice whereas other lenders allow you to borrow a larger minimum amount. Figure out how much you need for your furniture and ensure that you find a lender that will provide the amount you need.
- How do you want to repay your loan? Some lenders offer weekly, fortnightly or monthly payments. Some lenders only offer monthly repayments but allow you to pay off a bit extra without charging any fees. Look into what suits your payment schedule and decide which lender best matches your circumstances.
- Fees and charges. Whether or not there are costly fees and charges associated with a particular lender will impact whether or not the lender is right for you. If you know you’re likely to miss repayments, interest-free finance might not be for you. Repayment default charges include a service fee plus a percentage of the amount added to what you owe to be paid back.
- Look into your habits and research what fees will be charged before making a final decision.
What should you avoid when buying furniture on finance?
Some things you should be wary of when buying furniture on finance include:
- Taking on a loan you can’t afford. Although you need new furniture, there’s no point in applying for a loan if you are financially unable to pay it back. This creates more debt for you and can begin a downward cycle of applying for loans to help you pay back other loans.
- Restrictive deals. This is another pitfall to consider. Although you think you might be getting the best deal out there, look carefully at what you’re really getting and if it is unnecessarily restrictive, look elsewhere.
- Promotional interest rates. Walking into a store and seeing 1% rates available is tempting to anyone who wants new furniture. However, the rate rarely stays this low for long and will revert to a higher rate once the promotional period is over. Before getting too excited, check what the rate will revert back to after the promotional period ends to determine how it will impact your repayments.
Have more questions about getting a loan for furniture?
Can I be considered if I have bad credit?
Yes, you can. However, not all lenders will consider your application if you have bad credit. You can compare a range of bad credit lenders that may consider you here.
What kind of furniture can I get through a furniture loan?
This depends on what you seek. Some lenders only allow you to get specific furniture, such as a new bed or white goods, whereas if you opt for a personal loan, you are able to get whatever furniture you need as long as you can afford it with the amount you’ve requested.
Are there any fees or charges?
This varies with what lender you decide on and which loan option you choose. Generally, there are fees and charges associated with any loan that you take out, but the fees vary from lender to lender.