24 November 2015

Financing home furniture

Buying new furniture can be expensive – we take a closer look at some of the most common ways to pay for it.

Has your sofa seen better days? Or perhaps you need a new dining table to cater for your expanding family? You may even have just bought your first home and need something to fill it with.

Whatever your reason for splashing out on some new furniture, it can be an expensive business. Sofas, dining tables, beds, all tend to cost hundreds of pounds and if you’ve got a few pieces to buy it soon adds up.

Of course you can always save up, but if you haven’t got anything to sit on, eat at or sleep in, the chances are you want your new furniture sooner rather than later.

If paying for your items outright isn’t an option, there are various ways you can spread the cost over time. We take a closer look at some of the most common.

Finance schemes

Most big furniture retailers will offer a finance scheme, allowing you to spread the cost of any purchases over months or even years, or giving you the option to pay nothing for a set amount of time. Some retailers offer interest-free credit for a set period, which can help make big purchases more manageable. However, if you can’t afford to keep up your scheduled payments you could be hit by charges and a high interest rate on the remaining amount. Sometimes if you miss a payment, interest is even backdated.

If the credit isn’t interest free, you need to check the interest rate carefully, as it may be higher than a typical credit card, and you may not have the option of paying it back early.

If you are thinking about using an in-store finance scheme, remember to read all the paperwork carefully so you are aware of any extra fees and charges. You should also make sure that you can budget comfortably for the monthly payments.

Credit cards

Credit cards are another option when it comes to paying for expensive items over an extended period of time, and if you have a good credit rating, you may be able to find a card which offers 0% interest on purchases for a set period. But remember, you should budget to pay off your card within the interest free period, or think about transferring the balance to another 0% card, or you may be hit by a hefty interest rate.

Even if you aren’t eligible for an interest-free deal, you may find that the interest rate on your credit card is lower than in-store credit.

The other main benefit of using a credit card to fund furniture is that you can pay it back at your own pace. You need to make the minimum payment each month, but after that you can pay as much or as little as you can afford. If you have some extra cash one month you can pay off a significant chunk without having to worry about early repayment fees.

Personal loans

If you're buying a lot of furniture, it might be worth looking into a personal loan. You could borrow a significant sum – up to £25,000 usually, and decide how long you want to pay it back over – typically between 1 and 5 years . Interest rates can be typically cheaper than a credit card or store finance, but the best deals are generally only available to people with good credit ratings. Make sure you shop around to get the best deal for you. At Nationwide we offer Personal Loans from 3.6% APR Representative (fixed) on loans from £7,500 to £14,999 from 1 to 5 years for our main current account customers. If you're accepted for a loan remember the rate you’ll pay is dependent on the amount you want to borrow and your individual circumstances.

A loan may also be a good option if you're thinking of buying different items from different stores, as you'll have a structured repayment plan rather than having to keep track of a separate credit agreement for each store.  This could also make it easier to budget for.

For more information on different types of borrowing, read our borrowing sensibly guide.

Nationwide Personal loans are available to UK residents aged 18-79. Credit cards are available to UK residents aged 18+. Both personal loans and credit cards are subject to status. Nationwide subscribes to the Lending Code.

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