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Appliance Financing: How To Find The Right Option

Miranda Crace6-Minute Read
October 19, 2021

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Many homeowners consider household appliances an essential part of their home. They can serve multiple purposes and generally make life easier. Some appliances can come with heavy price tags, though, and if you live on a strict budget, replacing or updating machinery could create a difficult financial situation for you.

Fortunately, several financing options are available for buying appliances so that you can get that new refrigerator and still be able to afford food to put in it. Since everyone’s financial needs are different, financing options vary based on required credit scores, rates and terms.

Let’s take a close-up look at your appliance financing options so you can find the one that’s best for your situation.

What Is Appliance Financing?

Appliance financing, or an appliance loan, allows you to purchase a household appliance with borrowed funds that you can repay over time, usually in monthly increments. Because appliances tend to be expensive, appliance financing can be extremely helpful when replacing broken appliances, upgrading to newer models or purchasing more energy-efficient ones.

While it’s nice not having to pay for an appliance in full at one time, be sure to consider interest rates and loan terms when deciding on a financing option. As with most financing, your credit score can also play a huge role in qualifying for financing, as well as the terms of the financing agreement. It’s a good idea to build your credit up before exploring your options, since a higher credit score tends to open up more opportunities.

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What Can You Use Appliance Financing For?

You can use appliance financing for just about anything related to home appliances. However, you might want to avoid taking out a loan to buy high-end luxury items like espresso machines, wine fridges or fruit juicers. Appliance financing works best for necessities, such as washing machines, ovens and refrigerators.

Let’s consider some of the possibilities that appliance financing can offer you.

Financing A New Washer And Dryer

A functioning washer and dryer are essential to living a healthy and hygienic lifestyle, and most people don’t have one and not the other. With appliance financing, you can afford one or both machines without derailing your personal finances.

Financing A New Refrigerator

If your refrigerator breaks down unexpectedly, you may need a quick solution before all your food goes bad. If you don’t have the spare cash on hand to buy a refrigerator, appliance financing can help get you a new fridge when you need it.

Upgrading Kitchen Appliances

Suppose you’re doing a full kitchen remodel. That can mean upgrading your oven, cooktop and dishwasher to the newest models. Some kitchen remodel financing options cover home appliances, but if not, you could get separate financing for the appliances you want.

Options For Financing Appliances

Below are four of the most common options for appliance financing. Take a moment to review them and see which one seems most suitable for your financial situation.

Payment Options

Minimum Credit Score Requirement

Time To Funding

Personal Loan

550

*Same day or 1 – 7 business days

In-House Financing

580 – 649

Same day

Rent To Own

No credit check

Same day

Credit Card

Varies by card provider

7 – 10 business days

Get A Personal Loan

A personal loan can be used for just about anything, including new home appliances. Personal loans are typically unsecured, meaning they don’t require collateral to secure the loan. Qualifying for a personal loan can instead depend on your credit score and debt-to-income ratio (DTI). A credit score of at least 650 can make your interest rates lower when you’re paying back the loan.

Assuming your credit score is high enough to qualify, the first step to being approved for a personal loan is getting prequalified with a lender. This can involve a soft credit check and will tell you the rates and terms you qualify for. After comparing lenders, you’ll submit an application along with the necessary documentation for your personal information and income. If you’re approved for the loan, you may receive your funds within a day to a week of your approval.

Rocket Loans℠ can also offer same-day financing to certain applicants, so personal loan borrowers may receive their money theday they apply.*

Ask About In-House Financing

Depending on where you buy your appliances, you may be able to secure in-house financing. This usually comes in the form of an in-store credit card that you can charge purchases to and pay back over time, but it’s only good for purchases from that retailer. You may receive a sign-up bonus, such as a no-interest repayment period, with in-house financing. Qualifying for in-store financing most often requires a credit check and a credit score between 580 and 649.

You can usually sign up for these cards at the store’s checkout counter or online. However, since this financing is only valid for a single retailer, your shopping will be limited to that store’s pricing. Additionally, once an interest-free period ends, you’ll be charged the full interest rate with your payments.

Rent To Own

Some retailers may offer a leasing option where you can take a product home and make weekly or monthly payments in exchange for using the appliance. If you stop making payments, you must return the appliance, which you’re typically free to do at any time. If you keep making payments, you’ll usually own the appliance after a period of 12 to 24 months.

Applying for a rent-to-own agreement requires no credit check, but you’ll have to share some personal information and possibly some references. The downside to leasing an appliance is that you may end up paying more over time than it’s worth, depending on the associated fees.

Buy An Appliance With A Credit Card

If you have a credit card, using it to pay for an appliance is an option. Although interest rates with cards are typically high, you can sign up for a new card with a 0% APR period. This promotional period will allow you to repay the loan interest-free for a period of time, typically 12 – 18 months. If the appliance isn’t paid in full during that window, you can face a high interest rateand possibly go into more debt.

How To Choose The Right Appliance Financing Option For You

Before deciding on a type of appliance financing, it’s best to thoroughly research and weigh the requirements of each option. To help determine which one would work best for you, ask yourself the following questions: 

  • Does this option require a credit check? If you’re worried your credit score is too low to qualify for a good interest rate, you might want to consider an option that doesn’t require credit approval beforehand.
  • Is there a minimum purchase amount? Some in-house financing options and credit cards could require a minimum purchase amount. Before using either of these options, make sure the appliance you plan to purchase meets or exceeds this dollar amount.
  • What is the monthly payment amount? Loans and lines of credit require users to make a minimum monthly payment. Before submitting a credit card or loan application, make sure your budget can afford this expense each month.
  • What is the APR? The annual percentage rate – sometimes called the purchase APR on a credit card – can help you evaluate the cost of using a specific type of financing. You’ll want an option that offers the lowest possible APR to help you save on interest and fees.
  • What term length would work best? If you use a personal loan, you’ll want to make sure the lender of your choosing offers a repayment term that fits your needs. The longer the term, the lower your monthly payment amount will be.
  • Are there additional fees? Credit card issuers – and some personal loan lenders – may charge borrowers extra fees for using their services. These costs could include a minimum interest charge, annual fee and processing fees.

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FAQs About Appliance Financing

You may still have some questions after reviewing your options. Below are some common questions about appliance financing.

Will appliance financing hurt my credit?

Financing like personal loans requires a hard inquiry, which can affect your credit, depending on the loan amount. If you make your payments on time and use your financing option wisely, your credit shouldn’t otherwise be negatively affected.

Can I finance appliances with no credit check?

Rent-to-own financing typically doesn’t require a credit check – only your personal information like your name, address, income data and housing status. Some retailers may request that you supply one or more personal references to qualify.

Can I get appliance financing with bad credit?

In-house financing has lower credit score requirements than your typical credit card – a score between 580 and 649 is generallyacceptable – but again, you can only use this financing in that particular store. By taking steps to improve your credit score, you may gain access to even more financing options.

Final Thoughts

Purchasing new home appliances can be expensive, but it’s often necessary. With the different appliance financing options that areavailable, you can decide which one is most ideal for your unique financial circumstances.

If you think a personal loan will work well for you, you can get started today with a prequalification from Rocket Loans.

*Same Day Funding available for clients completing the loan process and signing the Promissory Note by 1:00PM ET on a business day. Also note, the ACH credit will be submitted to your bank the same business day. This may result in same day funding, but results may vary and your bank may have rules that limit our ability to credit your account. We are not responsible for delays which may occur due to incorrect routing number, account number or errors of your financial institution.

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Miranda Crace

The Rocket Homes blog is here to bring you all you need to know about buying, selling and making the most of your home. Whether you’re thinking about becoming a homeowner, selling your current home or looking to keep your place in tip-top shape, our writers and freelancers bring their experience and expertise to meet you right where you are.