Furniture Financing FAQs

by Nick, Digital Specialist | March 2, 2023

Answering all your questions about how to use financing!

You probably see furniture commercials all the time for "special financing" or "no interest until the year 2093" or something along those lines. Financing can be a really useful tool for furniture shopping, but how does it work? What are the pros and cons?

Q: What exactly is financing?

A: Put simply, financing is when you borrow money (usually from a bank) to pay for your purchase, and then pay it back over time. It's a great way to help you split up the payments, afford better-quality items, or to pay for add-ons that were beyond what you expected to pay.

Q: What are the most common options?

A: The most popular options have been deferred-interest or no-interest plans for varying lengths of time. There are also some options available where you pay a little interest but get a longer term to pay off the loan. Some stores also offer an option where you can split a payment into a small number of payments (usually four or six) that are paid every couple weeks.

Q: Wait, what's the difference between deferred-interest and no-interest?

A: Deferred-interest plans give you a certain amount of time (let's say 12 months) to pay off your loan- but if you don't pay it off in that time frame, you are charged interest- probably from when the loan starts. No-interest plans are just that- interest will not be charged at all; however, you need to make regular monthly payments or you'll incur late fees. Your furniture store should be up front about how your plan works- don't be afraid to ask!

Q: What does the application involve?

A: It will vary depending on the store and/or the lender but you'll usually do an application on paper or on the computer. It will ask for your personal information, contact information, income, and more. Remember, this is a loan- so the bank will perform a hard check on your credit (which affects your credit score).

Q: Is there a minimum purchase required to get the best terms?

A: Probably. Unfortunately, it's probably buried in the fine print, but there is probably some kind of minimum purchase requirement in order to get the terms that are advertised.

Q: How do I pay it?

A: You'll usually make your payments to the bank that you got the loan from- not the store where you bought your furniture. Generally speaking, you'll need to make regular monthly payments of some kind in order to avoid a late fee. However, be aware- if you just pay the minimum each month, you may not pay off the loan in time! This is especially true of deferred-interest plans- you may need to pay more than the minimum to pay it off in time.

Q: What if I miss a payment?

A: For one thing, you'll definitely get a late fee. Depending on the plan, you may also be charged interest- so make sure you don't miss a payment! However, if you encounter some kind of financial hardship and can't make a payment, call your bank. They may be able to work with you.

Q: Once I pay it off, can I use it again?

A: Usually, yes! Actually, most furniture financing accounts use revolving credit- meaning that you can use whatever balance has been paid off, even if it isn't paid in full. When you finish paying off the loan, you can usually use it again for a limited period of time before the account is closed- so go shopping!