How to Pay for Furniture for Your New Home

Congratulations, you just bought your dream house! Now it’s time to make that house a home. Step one: furnishing the place. Unfortunately, furniture costs can get expensive fast.

According to real estate agent Sarah Bowles of Urban Habitat, furnishing a new home from scratch can cost up to 25% of your home’s value. Furnishing a new home will require some financial planning. The question is, how will you foot the bill?

Furniture payment options

Cash

The most straightforward way to buy your furniture is to use cash. You can either pay with existing savings or take some time to save the money up. If you take this route, you can avoid debt altogether, and can sidestep any interest.

If you want to buy your furniture with cash, consider buying it over an extended period of time. You could allocate a chunk of your paycheck every month in order to stay within budget.

“Ultimately, it is important to recognize that you can take your time when furnishing your home because most homeowners will stay in one place for six years before moving,” Bowles says. A good approach is to identify all of the things you need and to make a list. Then, prioritize the pieces of furniture from most to least important.

Where you decide to shop also affects total costs. “Are you visiting IKEA and Target, or higher-end furniture stores, like West Elm and designer shops?” Bowles asks. “If you don’t want to blow the bank, shop smart. Visit antique stores, discount shops, and Craigslist if you are looking to save on your furnishings.”

Pros

  • Pay no interest or fees.
  • No debt acquired or strings attached.

Cons

  • May take a while to save up for purchases.
  • May not be able to furnish your entire home immediately.
  • Won’t build credit.
  • No rewards programs to earn returns on your spending.

Personal loan

Another option is to take out a personal loan. With this approach, you can get a large amount of money up front. This option may enable you to get most, if not all, of your furniture right away. Then, you can pay back the money over time on a plan that works with your budget.

A personal loan lets you get your furniture right away, without having to drain your savings. Repaying the loan will also build your credit score, assuming you make your payments on time.

However, you will have to pay interest and fees, which means your furniture will end up costing you more than if you had paid cash. And whether you’re approved for an attractive loan will depend on your credit score.

If you go this route, there are several online lenders that make getting a personal loan an absolute breeze as long as your credit is decent. You can apply online, and if approved, lenders can transfer the money to your bank account in as little as one business day. Prosper, SoFi, Lightstream and Avant are all great options.

Read more about our top picks for personal loan companies here.

Pros

  • Furnish your house right away.
  • Online lenders make the process accessible and convenient.
  • Build your credit by making timely payments.
  • High loan amounts are available.

Cons

  • Pay more for your furniture because of interest and fees.
  • May be difficult to get approved if your credit is poor.

Financing through a furniture store

Furniture stores may also offer financing options. This route can make the process easy as you can work out the deal in-store.

The downside is that you may not want to buy all of your furniture from that store, in which case you would have to figure out multiple funding options. And when you take the financing offered by the store, you don’t get to shop around for better deals. You may end up paying more than with other lenders.

Pros

  • Convenience — get your financing and your furniture in the same place.
  • Get your furniture now.
  • Build your credit by making timely payments.
  • The store may be more flexible with approval because they want to make a sale.

Cons

  • You may not want all of your furniture from one store.
  • You may not get the best rates on your financing because you can’t shop around.
  • You’ll have to pay interest and fees to the lender.
  • If you have bad credit, you may not get approved.

Credit card

Credit cards are another convenient option. You can shop around to find the card with the best interest rates, rewards and other benefits (such as travel perks, etc). Then just buy your furniture with that card, in store or online!

The downside to credit cards, as with loans, is that you interest and fees will increase costs over time. However, the better your credit, the less you’ll pay. Furthermore, you can earn rewards and build up your redit in the process.

You may be able to cut down on your financing costs by looking for a credit card with a promotional introductory period in which interest is reduced or nonexistent. Just be sure to pay off your balance in full before the end of the grace period: interest rates will skyrocket afterward.

Pros

  • Get furniture right away.
  • Earn rewards for your spending.
  • Build your credit by making timely payments.

Cons

  • Pay more for your furniture because of financing costs.
  • Your credit limit may be less than you need to buy all of your furniture.
  • Credit score determines approval.

How will you furnish your home?

Your credit score, your savings, and your monthly income will all affect which option is right for you! The most important step is to do your research. Compare different lenders offering personal loans, take a look at which credit cards you may qualify for, and take a hard look at your savings. With the right financing option, your home will be furnished in no time!

Shares