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Furniture Financing with Bad Credit
Let’s start with some options for bad credit financing. When it comes to having bad credit, your options are often more limited to personal loans through alternative lenders. Banks and furniture lenders like to see a credit score of at least 650 or more. Alternative lenders are often more lenient, but they do tend to have higher interest rates. Most of their loans are open though, so you have the option to pay them off early.
Another option to purchase furniture, instead of a personal loan, is a credit card. Whether you have a regular credit card, or a secured credit card, they are also a good way to pay for furniture if a loan isn’t an option for you. However, credit cards do have extremely high interest rates so it isn’t recommended to leave the balance there long or you could end up paying more than double in interest.
No Credit Check Financing
An alternative to bad credit financing is no credit check financing. Usually this would also be in the form of a personal loan or a payday loan, being that the loan isn’t secured to the furniture. While no credit check loans do exist, it is important to be vigilant when getting one. You want to make sure that the company is legitimate. And just because they don’t require a credit check, doesn’t mean that they don’t require any personal information. They usually want to see pay stubs as well as bank statements to verify that you are able to pay the loan back.
When opting for a no credit check loan, it is important to keep in mind that, because there is more risk involved, the interest is extremely high. Often anywhere between 350%-700%. While a personal no credit check loan is more structured and has equal payments, payday loans often need to be paid back quickly, usually just a few weeks. With the personal loan, you can often make payments whenever you want which helps to decrease your interest. Since payday loans don’t give you as much time to pay them off, many people end up taking out another payday loan to get out of the first one. It ends up becoming a difficult cycle to get out of.
Canadian Companies that Offer Furniture Financing
There are actually quite a few Canadian companies that offer furniture financing. It is important to keep in mind though, that you have options. For some people, furniture financing may be the way to go, but for others it may not. There are a lot of promotional offers that come with furniture financing, but before you accept anything you want to be certain that you can pay for it. If not, you may end up paying a lot more in interest than if you had just gotten a personal loan in the first place.
Whatever company you choose to go with, furniture financing usually comes in the form of a credit card and is considered revolving credit. It is often buy now, pay later as well. This can be dangerous but as long as the payments are manageable, it is a good option for some.
The Brick
For financing, The Brick uses the Flexiti credit card. This card can only be used at certain places and they often have interest free promotions. You could get anywhere from 3 months to a year before you need to pay the balance interest free. There is usually no fee for the first 3 month deferral but there tends to be an administration fee for the 6 month and 12 month deferrals. You can apply online in just a few minutes and receive a credit limit almost immediately. All you need to do is provide a valid email address required to receive the virtual card and credit limit, as well as fill in the required information. Once you receive your credit line you will also get your initial account AIR. This is the interest rate you will be paying once the promotional period is over and a balance is still owing. This card, just like other financing options, is subject to a cardholder agreement. Luckily, there is no annual fee with this card, unless you live in Quebec.
The great thing about this card is once you have approved credit, you can keep it with your limit for the next time you need to make a furniture purchase. And, even though you already have the card, you can still qualify for the promotions. It is a good thing to keep in mind, though, that if you do not make the payments in the allotted period of time, the interest rate is quite high.
Leon's
Just like the Brick, Leon’s uses the Flexiti card for its furniture financing. The same principles apply.
Wayfair
Instead of using a Flexiti card, Wayfair has its own credit card where they partner with Flexiti. It’s easy to get the Wayfair card. All you have to do is apply online and they have this cool feature where if you already have a Flexiti card, you can link it with your Wayfair card. On top of that, when you use your Wayfair card you have the choice of getting 3% back in rewards or 0% interest for up to 24 months depending on how much you spend. Currently there is an introductory offer of $25 back when you spend at least $150.
Furniture Depot
Another partner of Flexiti is Furniture Depot. Just like The Brick, and Leon's, you can apply directly on Furniture Depots website and, depending on the promotional offers available, you could be approved for 0% financing for up to 12 months depending on what is currently being offered.
Urban Barn
If you shop at Urban Barn, they use Pay Bright. How it works is you scan a QR code in store and sign up. From there you can set up automatic monthly payments once you have been approved. You should then receive a virtual card. This can be used for all of your purchases at Urban Barn ranging anywhere from a minimum purchase of $500 to $15,000. Any purchases over $7,500 can be spread out over 36, 48 or even 60 months.
Stoney Creek Furniture
Stoney Creek Furniture is paired with Fairstone for financing. How it works is you apply online and wait for your approval. If you are approved you will receive a virtual card and have to prove your identity in person with 2 pieces of ID. Once that is done you can choose to defer your payments for 3 to 6 months at 0% interest or you can get 12, 24, 36 months of financing for 9.999% interest and a $49 application fee. However, if you have financed a custom order a 40% deposit will be required.
Ashley HomeStore
In order to finance with Ashley HomeStore, you would use the Ashley HomeStore credit card which is also financed by Fairstone. You have a choice of no payments for up to a year or equal monthly payments for up to 2 years with no interest. Keep in mind that not all Ashley HomeStores offer this financing so check in with your local store before you decide to purchase.
Credit Score Needed for Furniture Financing
The credit score needed to get furniture financing really depends on what company you are getting financing from. Some companies don’t even require a credit check. Those that do require a credit check though, usually do require you to have at least good credit.
Loans for Furniture Financing
Using a personal loan to purchase furniture is one of the most popular choices other than financing directly from the furniture company. The great thing about a personal loan, is that usually they are open and you can pay them off much faster than the allotted term. Whether you choose to go through a bank, credit union or alternative lender, they often have much lower interest rates than other types of loans. Because these rates are credit based, these interest rates vary anywhere from 5% to 47% and you can borrow anywhere from $500 to $50,000. Some companies will even lend up to $100,000. A lot of online lenders, like Spring Financial, can get you the funds you need in the same day or 1 to 3 business days depending on if you choose E-transfer or direct deposit. The main downside to a personal loan is if you get a secured loan instead of an unsecured loan. If you default on a secured loan you could lose your asset that was put up for collateral.
Those who opt to not go with furniture financing often use line of credits as well. Whether it be a regular line of credit, or a home equity line of credit (HELOC), line of credits only require interest only payments and the principal payments can be made whenever you have the money. Be careful with this though, because you could end up spending more on interest if you avoid paying the principal portion of the loan. When using a HELOC it is important to be certain that you can make your payments since your house is the collateral.
Lastly, there is a credit card. Credit cards tend to have pretty high interest rates and if you don’t pay them on time, can end up costing you a lot of money in interest as well. That being said though, credit cards are very convenient and can be the easiest type of loan to obtain. We often just have them just in case they are needed. Depending on the type of credit card you have, you could earn points and avoid paying interest if you pay the principal amount within the grace period. When using a credit card you need to be careful not to let the balance get too high otherwise it can be extremely difficult to pay off.
Financing through a Furniture Company versus Spring Financial
If you are considering furniture financing, you do have a few options. First you can go with the furniture company. Keep in mind if you go this route a credit check is likely and credit approval is usually needed. Take a look at the promotional offers and see if any of them work for you. Keep in mind, though, that these promotional periods, such as 3 to 12 months payment free, are easy to forget about which can make your furniture end up costing a lot more than you originally anticipated unless you go for an equal monthly payment plan.
If you choose to go with a personal loan, you have some flexibility as well as automatic monthly payments. Spring Financial is an online lender that specializes in personal loans for those of all credit types. So even though there is a credit check involved, chances are we can help you. We offer a wide variety of products but our personal loans range anywhere from $500 to $35,000. The great thing about a loan with Spring is that you apply in just minutes online. Once you are approved, you could receive your money the same day with E-transfer or you could opt in for direct deposit. All of our loans are also open, so even though you have set monthly payments, you can make extra payments on the principal whenever you like.
If used correctly, furniture financing can save you money in interest, but it can also hurt your credit in the process. Since most furniture financing are credit cards, these are considered to be revolving credit. If you use an amount higher than 30% on your credit card, it can damage your credit score. The longer it sits there, the more damage it does. So, even if you don’t have to pay for a year, you could be doing some serious credit damage.
Getting a personal loan with Spring Financial works differently. This is considered to be installment credit, not revolving credit, and is one of the most powerful forms of credit you can have on your credit report. Spring Financial reports to both credit bureaus, TransUnion and Equifax, so all positive payments will have a good influence on your credit score. This can lead to even cheaper financing in the future and allow you to obtain things like line of credits or new positive tradelines.
No matter which financial option you choose, you want to be sure to keep in mind your credit score as well as the cost of financing. In reality, you could go with either option and there would not be a huge financial difference. Whatever you choose make sure to check if there are any payment protection insurance premiums and then opt in or out. Keep in mind opting in will come at an extra cost. Money aside, it is extremely easy to damage your credit score but it can be difficult to build it back up so keep those things in mind before you make any decisions in regards to financing.
