Furniture Loans
Furniture loans in Australia can help you buy new couches, beds, dining sets or even cover costs for appliances and delivery.
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How we picked theseKey takeaways
- Keep the loan term shorter than the expected lifespan of the furniture so you are not still paying it off after replacing it
- Be cautious with 0% interest retailer finance as missed payments can trigger high backdated fees
- Reserve borrowing for larger furniture packages rather than small individual items that could be bought with savings
What is a furniture loan and what can I use it for?
If your furniture needs a refresh or you're starting with a blank slate, you can spread the cost with finance options. Personal loans let you borrow a set amount and repay it over a fixed term, sometimes up to 7 years for unsecured loans. You'll also see options like interest-free retailer finance or Buy Now Pay Later, which can be cheaper if you repay on time but often come with stricter timeframes and late fees.
You can use a furniture loan for:
- New furniture. You could be moving to a new place or wish to jazz up your current home. You can use a furniture loan to cover the cost of couches, armchairs, beds, wardrobes, bookshelves and others.
- White goods. These are large electrical goods such as refrigerators, washing machines, TVs, dishwashers and dryers. A furniture loan will typically cover these too.
- Upgrades. This can include upgrades, such as on your air conditioning unit.
- Transportation. Depending on the loan, you may also be able to cover the cost of transporting the new furniture or appliances.
What kind of furniture loans are available?
There are a number of options available, including:
- Unsecured personal loan. With an unsecured loan, you can borrow up to $50,000 without using an asset as security. The interest rate for these loans is higher than for secured loans. You can use the loan for just about anything, including the cost of transporting and moving furniture.
- Secured personal loan. If you have equity in your property, you could use it to secure a furniture loan too. Interest rates are generally lower than for unsecured loans. As with unsecured loans, you can use the funds to purchase anything you wish. How much you can borrow will depend on your equity.
- Peer-to-peer loans. With a peer-to-peer loan, you’ll be borrowing money from individual investors through a third party. These loans often offer interest rates personalised to your credit score. If your credit score isn’t perfect, you may still be able to borrow but with higher interest. If you have good credit, your rates are likely to be low and the loan will cost you less.
- Buy now pay later. With buy now pay later, you can buy furniture or appliances without interest and pay it off in instalments. Some of the providers include Afterpay, Zip Money and Latitude. While you won’t be charged interest, you could be charged interest and fees if you don’t make your repayments on time.
- Short-term loans. Short-term loans are also called payday loans. It is a quick and easy form of finance, but it is expensive. The loans come with high fees and charges and generally the loan terms are also short. You should ideally avoid payday loans except in case of an emergency.
Example: Buying a $3,000 lounge set
- Using a personal loan: You borrow $3,000 at 10% p.a. over 3 years. Your monthly repayments are $97. Over the life of the loan you'll pay $3,492 total ($492 in interest).
- Buy now pay later (BNPL): Services like Afterpay or CommBank StepPay typically split repayments into 4 instalments over 6 weeks. If you pay on time, you'll pay $3,000 total with no interest.
- But if you miss a payment:
- Afterpay charges a late fee of 25% of the purchase price, capped at $68.
- CommBank StepPay charges $10 per late payment, capped at $120 annually.
Takeaway: BNPL can be cheaper than a personal loan if you're confident you can repay quickly and avoid late fees. But for bigger-ticket furniture, where 4 instalments might be unrealistic, a personal loan spreads costs over a longer period with predictable repayments and less risk of extra missed payment fees.
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Finder survey: How many Australians of different ages have used a buy now pay later service?
| Response | 75+ yrs | 65-74 yrs | 55-64 yrs | 45-54 yrs | 35-44 yrs | 25-34 yrs | 18-24 yrs |
|---|---|---|---|---|---|---|---|
| No | 85.11% | 71.52% | 59.24% | 47.02% | 34.78% | 32.11% | 41.9% |
| Afterpay | 6.38% | 19.39% | 28.66% | 34.52% | 48.37% | 55.26% | 43.81% |
| PayPal Pay in 4 | 6.38% | 11.52% | 10.83% | 19.64% | 26.09% | 22.63% | 10.48% |
| Zip | 4.26% | 3.03% | 12.1% | 16.67% | 26.09% | 25.26% | 20.95% |
| Other | 2.13% | 2.42% | 3.18% | 2.38% | 2.72% | 2.11% | 3.81% |
| Humm | 3.64% | 3.82% | 5.36% | 5.98% | 5.79% | 5.71% | |
| Klarna | 1.82% | 4.76% | 5.98% | 6.32% | 5.71% | ||
| Openpay | 1.21% | 1.91% | 4.17% | 8.7% | 6.32% | 2.86% | |
| Bundll | 1.19% | 1.58% |
Source: Finder survey by Pure Profile of 1016 Australians, December 2023
How do I know which furniture loan is right for me?
When you’re comparing loans, there are a number of factors you need to consider. These include the following:
- Does the loan allow me to buy what I need? If you’re looking to make multiple purchases, you need to check if you can use the loan funds to cover what you need. If there are any restrictions on how you can use the funds, you’ll need to consider those too.
- Can I borrow how much I need? If you’re looking into major upgrades which will set you back a fair bit, you need to make sure the loan covers all the costs. If it looks like you won’t be able to borrow as much as you need, you should reconsider. Check the lender’s minimum and maximum borrowing limits.
- Is the loan secured or unsecured? Depending on whether you want to offer security, you can filter for secured and unsecured loans.
- What’s the interest rate of the loan? The interest rate is an important factor in determining the cost of the loan. A low interest rate means your loan will cost less, but it’s not the only cost you need to consider. Keep in mind that while a loan may have low interest, it could have high fees as well.
- What are the fees and the comparison rate? The comparison rate is the total cost of the loan, inclusive of fees and interest. Fees include monthly and establishment fees. It does not include other fees which may come with exiting the loan early or making extra repayments. If those are features you’re interested in, make sure to take into account how much it will cost.
- Do they offer the terms you need? If you need a loan term of 7 years, be sure to check if the lender offers this.
- Do they have multiple repayment options? Does the lender offer you repayment flexibility? Are you able to choose between weekly, fortnightly and monthly repayments? Do you want to be able to make extra repayments without penalty? If you want specific features with your loan, look for a loan that offers it.
- Am I eligible for the loan? This may sound obvious, but you need to check the lender’s eligibility criteria, including income and credit score. You should only apply if you tick all the boxes and meet their minimum requirements.
What should I avoid with a furniture loan?
- Applying for the first loan you see. You won’t know if you’re getting the best deal if you apply for the first loan you find. Compare your options first and make a shortlist based on cost, terms, convenience and eligibility. Go for the loan that offers you the best deal.
- High fees and charges. Try to avoid loans that come with thumping interest rates or fees. This will only make your repayments higher and make it harder for you to repay the loan. You may be able to afford it, but you can also find a better loan.
- Borrowing more than you can afford. Check the cost of the loan and make sure you can afford it. You should be comfortably able to include your repayments in your budget. You should also avoid borrowing more than you need.
- Splurging. You may be tempted to buy more than you need or go for furniture well outside your budget. Figure out what you can afford and stick to your budget. Avoid spending more than what you planned for. Remember you pay interest for every dollar you borrow.
- Multiple applications. Every loan application shows up on your credit report. Several applications within a short period can have a negative impact on your credit score. This can make it harder for you to get a loan in the future. Select a single loan and lender that you’re eligible for and that suits your needs. If you’ve already applied for legal finance, give it a few more days or contact the lender before applying elsewhere.
- Long-term repercussions and legal issues. Once you sign a loan agreement, you are bound to its conditions. You will have to pay the loan and all the fees and payments. Keep in mind that for unsecured loans, the lender can initiate legal proceedings against you if you don’t repay the loan. It can also report the debt to a credit reporting body like Equifax and use the services of a debt collector. With secured loans, your loan security can be repossessed by the lender if you fail to make your repayments.
How can I apply for a furniture loan?
- Work out what type of loan you need, how much you need to borrow and what you can afford. You can use a personal loan calculator to help you.
- Start comparing lenders. You can use the comparison table on this page. Don't forget to compare interest and comparison rates and find a loan you’re eligible for.
- Select a lender. If you’re using the comparison table, you can click “Go to site” to be directed to the lender’s page, or “More Info” if you want to read up on the lender.
- Organise and prepare the required documentation. This can make the application process easier.
- Apply. Most lenders have their applications online.
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