Financing Home Furnishings: Weighing the Pros & Cons

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Need furniture? Here are the pros and cons of borrowing to buy it.

Moving to a new home can be exciting. But if you're upsizing your living space, you may end up with too many rooms and not enough furniture.

If you've bought a home you need to furnish, you may not have the money to pay for it right away. Especially if you emptied out your savings account to make a down payment and cover the cost of moving.

You could take out a loan to finance your furniture, but is that a smart idea?

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The pros and cons of borrowing money for furniture

If you need to buy furniture but can't pay for it up front, a personal loan is a viable option. A personal loan lets you borrow money for any purpose, and the stronger your credit score, the more likely you'll snag an affordable interest rate.

Borrowing via personal loan for furniture is usually better than whipping out a credit card and racking up a balance. Not only do credit cards generally charge much higher interest, too much credit card debt can damage your credit score.

But before you take out a personal loan to buy furniture, ask yourself one big question: Can it wait?

When you move to a new home, you have to have a bed and a dining table. But chances are, you already own those items. If you have enough essential furniture, you may want to hold off on buying more until you've saved the money to pay for it without borrowing.

Any time you take out a loan, your purchases cost you more, since you pay interest on them. A $1,200 couch, for example, might end up costing you $1,500 if you have to borrow and rack up interest. You're generally better off avoiding debt if you can, and while it's natural to want a fully-furnished home, there's also no rule stating you can't have emptier rooms until your savings account is full.

Other options

While borrowing money is worth avoiding, there may be a more affordable way to finance furniture outside of a personal loan. First, look into store financing. You may be eligible for a no-interest or low-interest financing program if you have great credit and you can pay off your purchase quickly (say, within a year).

Another option is charging furniture on a 0% interest credit card, and paying off your balance before interest starts accruing. This option is viable if you know you have money coming your way soon.

For example, if you open a credit card with a 12-month 0% introductory interest period, and you know you'll get a large enough year-end bonus at work, then this route could work out well. But be careful -- there's risk in using a 0% interest credit card, so be sure you can definitely pay off that balance.

Taking out a personal loan to buy furniture isn't a terrible idea, but it's also not the best idea. Unless you're talking about items you can't function without, you're better off waiting to furnish your home until you can cover your purchases outright. That could mean throwing a beanbag chair into your den and hosting guests on your old futon until you can swing a nicer set for your guest room. But if that's what it takes to stay out of debt, it may be worth it.

The Ascent's Best Personal Loans for 2021

The Ascent team vetted the market to bring you a shortlist of the best personal loan providers. Whether you're looking to pay off debt faster by slashing your interest rate or needing some extra money to tackle a big purchase, these best-in-class picks can help you reach your financial goals. Click here to get the full rundown on The Ascent's top picks.