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6 ways to finance furniture

Need cash to upgrade your home decor? Here are your furniture financing options in Canada.

Furnishing a new home can be one of the most expensive aspects of moving. Even replacing a sofa or getting more clothing storage can be costly. Fortunately, there are several options for furniture financing in Canada that make it easier to get the items you want.

You can apply for in-store financing, personal loans, layaway and more. Each has its pros and cons, so compare your options before committing to a financing plan.

1. In-store furniture financing

Many furniture stores offer in-store financing, partnering with a lending company to finance your loan. If approved, you can get a low or zero-interest rate for a set number of months. Some stores that offer online or in-store furniture financing include The Brick, Leon’s, Wayfair, Furniture Depot, Urban Barn and Stoney Creek Furniture.

Pros

  • Easy to sign up for
  • Many stores offer financing promotions with low or 0% interest for the first 6 to 24 months

What to watch out for

  • Interest, which often ranges from 20% – 30%, may be deferred during the promotional period. You’re saddled with the full cost if you don’t pay back the loan within the promotional period.
  • There may be a minimum purchase requirement
  • You may be charged an admin fee
  • You may not qualify if you have bad credit

2. Personal loans for furniture financing

A popular alternative to in-store financing, personal loans are offered by banks, credit unions and online lenders. Online lenders have faster turnaround times and easier lending requirements, while banks and credit unions have more competitive interest rates.

Apply for a specific amount and get an offer that includes your interest rate and term length. The best rates and terms are offered to borrowers with strong credit scores and low debt-to-income ratios. Some lenders offer bad credit loans, but you’ll pay high interest rates.

Pros

  • Flexible loan amounts
  • Get funds as soon as the same business day with an online lender

What to watch out for

  • If you provide collateral, you could lose it if you default on your loan
  • High interest rates for bad credit

Competitive Rates

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Low interest rates
  • Options for all credit scores
  • Fast application
  • Quotes from multiple lenders
  • Pre-approval in five minutes
  • Low interest rates
  • Funds in as little as 24 hours

Flexible Terms

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  • Accepts bad credit borrowers
  • Easy online application
  • Quotes from multiple lenders
  • Access cash within 1-3 business days
  • High loan amounts of up to $50,000

Fast Financing

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No prepayment fees
  • Accepts bad credit borrowers
  • Same day funding
  • 100% online
  • No hidden fees
  • No prepayment fees
  • Established lender

3. Layaway

Not offered by every furniture retailer, layaway lets you make a deposit on the items you want and have the store set it aside for future pick-up. Make small payments until you’ve paid off the entire balance. Once your furniture is paid for, you can take it home.

Pros

  • Usually interest-free
  • Customizable payment plans

What to watch out for

  • You may be charged a service fee
  • Hefty cancellation fees often apply if you change your mind
  • Can’t take furniture home until it’s paid in full
  • You can’t take advantage of sales that happen while you’re paying off your furniture
  • It’s rare for retailers to offer this

4. Credit cards

Credit cards are useful when you’re making small purchases. Borrow up to your credit limit by paying with your card, and pay zero interest during the grace period — usually 21 days.

Pros

What to watch out for

  • If the balance isn’t repaid within the grace period, your credit score may be hit and you’ll pay interest.
  • Your credit score will be hurt if you use more than 30% of your limit

Scotiabank Value Visa Card

Scotiabank Value Visa Card logo
Credit recommended (670-)
Apply now
on Scotiabank's secure site
670
Min. credit score
$29 ongoing
Annual fee
12.99%
Purchase Rate
12.99%
Cash Advance Rate
The Scotiabank Value Visa Card is a no-frills low-interest card that can help you save on Black Friday financing. You can use this card well beyond the holidays for more affordable cash advances and debt consolidation.
  • Low-interest rate. Low purchase and cash advance interest rates of 12.99%.
  • Balance transfer option. You can transfer other balances to this card and pay an interest rate of 12.99% with a 0% introductory interest rate on balance transfers for the first 6 months, and 12.99% thereafter. Offer ends October 31, 2024.
  • Other perks. Get up to a 25% discount at participating Budget and AVIS car rental locations in Canada and the US.
  • Annual fee. This card has an annual fee of $29.
  • Limited benefits. No cash back or rewards.
  • Foreign transaction fee. This card has a foreign transaction fee of 2.5%.
Annual fee $0 intro annual fee for the first year ($29 thereafter)
Purchase APR 12.99%
Balance transfer APR 0% intro for the first 6 months (then 12.99% )
Balance transfer fee $3.50
Rewards Get an on-going low interest rate of 12.99% on eligible purchases.

5. Rent-to-own plans

Not sure if you’re ready to buy new furniture? Some stores let you rent furniture and return it any time with no fees. However, this can be an expensive option. Renting the furniture may cost you more in the long run.

Pros

  • Doesn’t usually require a credit check
  • Good if you only need furniture for a limited time (you’re hosting a party or having guests live with you for a few months)

What to watch out for

  • If you rent for a long time, you could pay more than the furniture is worth
  • Some stores charge a large, final payment if you want to buy when the rental period is up

6. Home equity loans and home equity lines of credit (HELOCs)

Home owners can borrow using their home as collateral. If you do this instead if getting an unsecured personal loan, lenders will likely offer more favourable rates and terms. A home equity loan comes in fixed amounts. A HELOC lets you borrow as much as you want up to a limit.

Pros

  • Affordable financing option for borrowers with poor credit
  • Get competitive rates using your home as collateral

What to watch out for

  • New home owners may not have enough equity built up to borrow against their homes’ value
  • Risk of losing your home if you can’t repay the loan

How do you get furniture financing in Canada with bad credit?

If you have bad credit and need furniture financing in Canada, personal loans from online lenders are an option worth considering. Some online lenders specialize in bad credit loans, although you’ll pay high interest rates since lenders are taking on more risk.

Usually, you can fill out an application and find out if you’re preapproved for a personal loan within minutes.

How much does new furniture cost?

Knowing how much furniture may cost can help you decide on the right furniture financing option for you. The cost depends on the type and quality of furniture that you want. While you can get a dining room set for as little as $100 at IKEA and similar stores, you can easily spend 20 times that amount at a high-end retailer. Here are some common prices for various pieces of furniture from Wayfair Canada.

Representative example: Paul finances a lounge set

Paul’s old couch and recliner are well past their best, so Paul decides it’s time to purchase a new lounge set for his living room. He finds the lounge set he wants for $3,000, which is more than he can easily afford to pay upfront.

Paul decides to finance the lounge set to ensure that he doesn’t blow all his savings in one go. He compares financing options from four lenders to find an affordable loan. Check out the table below for details of his comparison.

Lender ALender BLender CLender D
Amount borrowed$5,000$5,000$5,000$5,000
Interest rate0%9.99%7.99%10.99%
Loan term18 months24 months36 months48 months
Admin fee$99.99$0$0$0
Total interest$0$536.84$639.72$1,201.76
Total cost$5,099.99$5,536.84$5,639.72$6,201.76
Monthly payment$283.33$230.70$156.66$129.20

Paul decides to get financing from Lender A. Though Lender A charges a $99.99 admin fee and has a high monthly payment, it offers the cheapest way to finance his furniture purchase.

6 tips for saving before you finance furniture

  1. Buy direct from the manufacturer. Wholesale prices from the manufacturer are often less than retail prices you find at the store or online.
  2. Go to warehouse sales. It’s common for furniture stores to open their warehouses to push out overstocked items, sell floor samples, returned or damaged furniture – often at a big discount.
  3. Shop secondhand. Not only are secondhand items less expensive than new furniture, a well-made used item often lasts longer than its cheaply made counterpart.
  4. Shop at the end of the month. Salespeople often have a monthly quota to meet and are sometimes more willing to budge on the price if they’re short on sales.
  5. Wait until January or July. New showroom styles usually come out in February and August, meaning that salespeople might be pushing to get rid of older styles the month before.
  6. Sign up for sales alerts. If you don’t need furniture now, signing up for sales alerts could help you find a deal you might have otherwise missed.

Bottom line

In-store financing is easier than taking out a personal loan and could be a good deal if you’re able to make repayments on time and before the financing period is up. However, you may not qualify if you have a history of missing bill or loan payments. If you have bad credit, consider applying to alternative lenders of personal loans.

Frequently asked questions about furniture financing

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