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How to finance new furniture

Want to upgrade your home decor but don't have the money up front? Here's how you can pay for it.

Furnishing a new home or apartment can be one of the most expensive parts of moving. But even replacing your sofa or expanding your closet space can cost more than you have saved up. Fortunately, there are several different ways you can make the cost of that new dining room table a little more affordable.

6 ways to finance new furniture

There several different ways to finance new furniture that includes in-store financing, personal loans, credit cards, home equity loans, rent-to-own options and credit cards. Depending on what you’re buying and your personal financial situation, not all options might be right for you.

1. In-store financing

Many furniture stores offer financing. It’s easy to sign up for, and many offer loans with a promotional introductory rate of 0% APR for the first 12 to 24 months. If you think you can pay off your loan before that period is up, this option could be a great deal for you.

But many of these deals come with a deferred interest clause. This means that if you’re unable to pay back the loan by the end of the promotional period, all of the interest you would have had to pay gets added to your loan. Since interest on these loans is typically around 20% to 30%, it can add up quickly.

2. Layaway

Layaway is another in-store option for buying a piece of new furniture. Instead of taking the furniture home and paying it off plus interest, layaway allows you to reserve a piece of furniture that stays in the store until you can pay it off in installments.

While you won’t have to pay interest, there are some downsides to buying furniture on layaway. Some layaway deals require a down payment before you start making installments. Others might charge a one-time fee before you start making payments. And if you change your mind, most deals charge hefty cancellation fees.

Plus, if that type of furniture goes on sale while you’re paying it off, you won’t be able to take advantage of the deal.

3. Rent-to-own stores

Not sure you’re ready to commit to that new sofa? Some stores allow you to rent furniture and return it at any time without charging a fee. Typically there’s no credit check, and it could be ideal when you only need something for a limited time — like an extra bed for when your in-laws visit or a big TV for your annual Super Bowl party.

The downside is you could end up paying for more than the item’s worth if you rent it long term — sometimes several times its value. Some rent-to-own stores might also charge a balloon payment if you decide you want to own it when your rental period is up. But not all do.

4. Personal loans

Personal loans are a popular option for people who don’t want to use in-store financing to buy furniture. To get the best deal on a personal loan, you should have good credit and a low debt-to-income ratio. Personal loans typically range from $2,000 to $50,000, though you can find lenders who offer as little as $1,000 and as much as $100,000.

Interest rates tend to run from 6% to 36% and terms often span between three and five years. While you might not be able to take advantage of the 0% interest rate deal with a personal loan, it’s less risky. And if you go with a lender that doesn’t charge a prepayment penalty, you can save on interest by paying it back early.

5. Home equity loans

Home equity loans involve borrowing against the amount of equity in your home. Since it’s secured with your home as collateral, lenders are likely to offer more favorable rates and terms than on an unsecured personal loan. It could be a more affordable option for borrowers who don’t have stellar credit.

If you just bought a new home, it’s likely you haven’t built enough equity to borrow from, however. Also, you run the risk of losing your home if you can’t pay back the loan on time.

6. Credit cards

Credit cards could be useful in two situations: When you’re making small purchases and when you want to take advantage of 0% financing. Using a credit card for small purchases that you can repay quickly, or is a small percentage of your credit limit is convenient and might not cost you much at all.

For larger purchases, consider signing up for a new card with a 0% promotional period and without a deferred interest clause. That way you won’t run the risk of paying extra interest if you miss a payment or can’t pay it off before the promotional period is up.

The drawbacks of furniture store financing

Getting a loan with a 0% promotional period might seem like a logical choice, but there are some major drawbacks to keep in mind.

  • Missed payments
    If you miss a payment on your in-store furniture loan, the deferred interest clause could kick in early. Paying high interest on a loan that you’re already struggling to pay off could send you into a cycle of debt.
  • Consumer finance loans
    Then there’s the fact that some in-store financing deals don’t require a credit check. If you have a term loan, it shows up on your credit report as a consumer finance loan, which is a type of credit designed for poor-credit borrowers. Lenders who see this on your credit report might not be as willing to offer you a good deal on a loan in the future.
  • Revolving accounts
    Some furniture stores might report your loan as a revolving account. With a revolving account, you have access to a certain amount of funds — or credit limit. When you buy furniture on a revolving account, typically you use your entire credit limit.

This can hurt your credit score by damaging your credit utilization ratio. The less you use of your credit limit, the more favorably it’ll reflect on your credit score.

How much does new furniture cost?

The cost of new furniture depends on the type and quality you’re looking for. While you can get a dining room set for as little as $129 at Ikea and similar stores, you can easily spend 20 times that amount at a high-end retailer. Below we show the average price for various furniture, according to estimates from

Living room

ItemTypical cost
Coffee and end tables$760

Dining room and kitchen

ItemTypical cost
Dining set$1,118
Pots and pans$180


ItemTypical cost
Shower curtain$32


ItemTypical cost
Mattress and boxspring$1,536
Bed frame, nightstand and dresser$2,050

Outdoor furniture

ItemTypical cost
Lawn furniture$470

6 tips for saving on furniture

  1. Buy 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 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. But personal loans come with less risk and could end saving you money if you have strong credit. You can learn more about how personal loans work and compare lenders by checking out our guide.

Frequently asked questions

What kind of credit score do I need to get a furniture store loan?

It depends on the store, but many furniture stores offer financing for all credit types. Layaway also typically doesn’t require a credit check at all.

Can I use a mortgage to cover furniture costs?

It depends on the type of mortgage you have. You can’t with an FHA mortgage, though some other types of mortgages might allow you to. However, since mortgages are long-term loans, you could end up paying a lot more for your furniture than with a personal loan or even a home equity loan.

How can I pay off my furniture loan fast?

The fastest way to pay off your furniture loan is to make larger repayments each month, but check with your lender to make sure there’s no prepayment penalty. If you want to adjust the rates and terms of your loan, you might want to consider refinancing it with another lender.

Can I get a loan to help with moving costs too?

Yes. You could get a relocation loan to cover the costs of moving, whether it’s interstate or even cross-border.

Image source: Shutterstock

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