Loans for household goods
Need finance to purchase household goods? Learn how to qualify and what options are available.
All families have a household to maintain, and require equipment and furniture such as fridges, ovens and sofas. However, you may not have funds available to purchase or replace these household goods.
In this case, there are many finance options available. These include in-store finance from the shop you plan to buy your household item. Banks and credit unions offer loans you can use to purchase equipment and furniture, and there are also interest-free loans available.
Short-term loan options for household goods
What types of loans are available?
You may qualify for the following types of finance if you want to purchase household goods:
- Personal loans. These are traditional loans offered by financial institutions, eg banks and credit unions, and are disbursed up-front as a lump-sum payment. The borrower pays back the loan, plus interest and other fees, based on a fixed repayment schedule over the term of the loan, which is anywhere from one year to seven years (or more in some cases).
- 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, usually between three months and one year. Eligibility requirements for short-term loans may be more stringent than other types of finance.
- Interest-free loans. If you are on a low income or receive a Work and Income benefit, you may be eligible for an interest-free loan from Good Shepherd New Zealand, as a part of the No Interest Loans Scheme (NILS). You may qualify for anywhere between $300 and $1,000 and no interest is charged.
- In-store financing. In-store finance is offered through the company or store where you buy your household goods. There are also credit cards that offer particular in-store finance options such as Gem Visa and GO MasterCard.
How much can I borrow?
How much you can borrow depends on several factors. This includes the value of the household goods you’re buying. For instance, fridge and sofa prices may range from a few hundred dollars to a couple of thousand. The same goes for other household items such as computers and entertainment centres.
Also, each type of finance has a minimum and maximum loan amount. 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 NILS only allow you to borrow between $300 and $1,000 and require you to use the money for household-related goods and expenses.
With in-store finance, the amount borrowed depends on the particular company you borrow from and is restricted to the household goods you purchase (unlike personal and short-term loans).
How to compare loans for household goods
Bear in mind the following factors when comparing your different options:
- Loan amount. This is the amount disbursed to you. The lender may not approve the entire loan amount you request, as they consider certain factors such as what you need the money for, past borrowing history and income.
- Interest rates.Be aware of the interest rate when comparing your options, and whether it’s a fixed or a variable rate loan. For variable rates, make sure you can still make repayments if the rate spikes upwards during the life of the loan.
- Fees. Depending on the type of finance, be aware of one-off fees such as application fees and early repayment penalties. Also, ongoing charges, such as monthly or annual fees need to be considered.
- Repayments. No matter what type of finance you opt for, make sure you understand the repayment terms, and make sure you can 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 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 to qualify for the loan.
How much does a household goods loan cost?
- Personal loans. These include fixed or variable interest rates charged on the principal balance. They may also involve one-off and on-going fees such as application fees.
- Short-term loans. Like personal loans, you are 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 are only responsible for paying back the loan amount you borrow. For loans received from Good Shepherd New Zealand, there are 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 certain credit cards offer in-store finance so check with your credit card provider to see their rates and charges.
Is there anything to consider before applying?
- Getting into too much debt. It’s easy to fall into debt so make sure you’re able to pay back the loan you apply for. Also, never borrow more than you 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 a short space of time, they may consider this irresponsible borrowing. Being rejected for credit products may also negatively impact your credit score.
Frequently asked questions about financing household goods
Will I qualify?
This depends on the requirements set out by the lender. The criteria for each lender is listed on the review pages of finder.com/nz and you can confirm this by clicking on “Go to Site”. In most cases, you need to be older than 18 years of age and be a New Zealand citizen or permanent resident. However, there are loans available for temporary residents.
Can I qualify with bad credit?
This depends on the lender and loan type, but there are lenders that offer loans to bad-credit applicants. However, the rates and fees on these loans are usually higher. To mitigate theses higher fees, 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 in how you are allowed to use the funds. However, with low-interest or interest-free loans, you may be restricted to using your funds strictly for household goods and expenses.