How to find the most affordable appliance financing

Most homeowners consider household appliances an essential part of their home. It’s hard to think of anyone, for instance, who can live without a refrigerator. But large appliances come with a hefty price tag that can strain the monthly budget. Fortunately, several financing options are available for buying appliances. These options can vary widely, however, based on their minimum credit score requirements, interest rates, and financing terms.

What is appliance financing?

Appliance financing, or an appliance loan, lets you buy a household appliance with borrowed funds. This can be very helpful when your refrigerator breaks down and you don’t have enough saved to quickly buy a new one – which can and does happen to many people. Basic refrigerators cost around $500, but the price rises into the thousands for high-end appliances.

If you don’t have that kind of cash available, you can take out a loan and repay it over an extended period, usually in monthly increments.

While an appliance loan is a quick and convenient solution, always consider your interest rate and loan terms when financing an appliance. Here, your credit score plays a significant role in your loan getting approved, as well as the interest rate and the quality of the terms the lender is willing to offer.

You can start now by building your credit to get the best financing options on an appliance, or any other loan you’ll need in the future, such as for a car or a mortgage on a house.

Consider financing these major appliances

Most appliances qualify for financing. Although it may be tempting to finance any type of appliance, avoid financing luxury items, such as espresso machines, wine fridges, or juicers. Use monthly financing to pay for major and necessary appliances like washing machines, ovens, and refrigerators. Appliance financing can take many forms, with different interest rates and payback terms.

Let’s consider some of the major home appliances you might wish to finance, their average cost, and why appliance financing might be a good option.

Financing a new washer and dryer 

Having a functioning washer and dryer at home saves you the time spent at a laundromat pumping money into expensive machines. Appliance financing can help you afford a washer and dryer without derailing your budget. Before making this purchase, however, be sure that your house or rental property is equipped with the necessary plumbing and space to install these appliances.

The highly competitive and diverse appliance market supplies everything from basic, inexpensive washers and dryers at value pricing ($450 each) to large machines with sophisticated electronics and features that cost $1,500 – $5,000 or more. If you have limited space in your house or apartment, you can buy a stackable washer and dryer for $800 – $1,500 for the set, or even a combo machine that washes and dries a load of clothing in the same machine for $1,200 – $2,000.

Financing a new refrigerator

If your refrigerator suddenly fails, you may be able to get by for a few days without replacing it, but this is the kind of urgent financial challenge an appliance loan is there for. If you don’t have room in your budget to buy a new fridge, appliance financing enables you to pay for the appliance over time through lower monthly installments.

For example, a person with a good credit rating financing a $3,000 refrigerator, with a regular personal loan over 24 months, can expect a monthly payment of about $150.

A small, countertop refrigerator might be enough for a single person who doesn’t cook a lot and can be purchased new for less than $200. Standard-sized value refrigerator with freezers are commonly found on the market for $500 or less. Higher end refrigerators can cost up to $15,000 or more, but the most popular models found in American homes run between $500 – $5,000.

Upgrading kitchen appliances

Renovating the kitchen leads many homeowners to upgrade their major appliances, such as the oven, cooktop, refrigerator, freezer, and dishwasher, at the same time. Many homeowners who undergo this expensive home improvement will have already secured kitchen remodel financing options that have built in the cost of upgraded appliances. If not, separate refinancing options also are available for these new appliances.

Options for financing appliances

Appliance financing includes four common options: a personal loan from a bank or other lender; in-house financing through the retail store or manufacturer; rent-to-own, in which you make payments until you reach an agreed-upon amount, after which you own it; and credit card. The table below outlines the common types of financing and the basic details.

Financing appliances with a personal loan

A personal loan can be used to finance your new appliances. Many personal loans are unsecured, meaning they don’t require collateral. Qualifying for a personal loan depends on your credit score and debt-to-income ratio. A credit score of at least 650 helps you secure a lower interest rate.

You can start the application process by getting prequalified. This involves a soft credit check and tells you the rate and term for which you can qualify. After comparing lenders, apply along with the necessary documentation. 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, enabling borrowers to receive their money the day they apply.

In-house financing for purchasing an appliance

Some stores offer in-house financing. This type of financing typically involves applying for an in-store credit card. You pay for the appliance using the card and pay the balance over several months. However, this type of financing is applicable only for purchases from that retailer. In-house financing may offer financial perks, including a no-interest repayment period.

Qualifying for in-store financing often requires a credit check. Many retailers prefer a credit score in the 580 to 649 range. You can usually sign up for these cards at the store’s checkout counter or online.

This financing is only valid for a single retailer, and you’re limited to that store’s pricing. Once the interest-free period ends, you’re charged the full interest rate on the remaining balance.

Rent-to-own appliance financing

Some retailers may offer a leasing option that allows you to take an appliance home and pay weekly or monthly on the cost of the purchase. If you have a very low credit score, this option can be best because it does not require a credit check. However, even though you take the appliance home, you do not yet own it. If you stop making payments during a rent-to-own agreement, you must return the appliance. Typically, appliance financing via a rent-to-own agreement extends to one or two years. At the end of the financing period, you own the appliance.

Even though a rent-to-own agreement typically doesn’t require a credit check, you will need to provide some personal information. Some retailers also may request references. The downside to leasing is that you may end up paying more over time than the sticker price of the appliance, depending on the associated fees. 

Financing 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 zero percent APR period. During this promotional period, you can typically repay funds interest-free for 12 – 18 months. If you don’t pay off the appliance during that window, the balance becomes debt at likely a high interest rate.

How to choose the right appliance financing option for you

Before choosing how you’ll finance your appliance purchase, it’s best to thoroughly research and weigh each option.

• 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 a financing option that doesn’t require a credit inquiry.
• Is there a minimum purchase amount? Some in-house financing options and credit cards could require a minimum purchase amount. Before using either option, make sure the appliance you plan to buy 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 you submit a credit card or loan application, make sure you 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. Credit card companies are in competition for your business, and they all offer low-rate introductory deals, so shop around.
• What term length would work best? If you use a personal loan, make sure the lender you choose offers a repayment term that fits your needs. The longer the term, the lower your monthly payment amount will be–but because that means more months of paying interest, you will ultimately pay more for the appliance.
• 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.

FAQs about appliance financing

You may still have some questions after reviewing your options for appliance financing. Use our FAQs to find the answers to your financing questions.

Will appliance financing hurt my credit?

Entering into a financing agreement, such as a personal loan, requires a hard inquiry on your credit history, which can lower your credit score. However, making on-time payments on the loan in the months ahead may even improve your credit.

Can I finance appliances with no credit check?

Rent-to-own financing typically doesn’t require a credit check. You may need to provide information such as your name, income data and housing status. Some retailers may ask you to supply one or more personal references to qualify.

Can I get appliance financing with bad credit?

In-house financing through the retailer tends to have a lower credit score requirement than a typical credit card. Again, a score between 580 and 649 is generally acceptable. Remember that you can only use these funds for the store that issues the credit. By taking steps to improve your credit score, you may gain access to even more financing options.

When is the best time to finance appliances?

If you don’t have to purchase a new appliance immediately (such as when your refrigerator suddenly breaks down), you can keep your eye open for sales at big box stores or specialty appliance retailers. A good time to buy is often in the late months of the year, from October through December. This is when stores offer holiday sales and try to reduce inventory. Be aware that this is also a time of high consumer spending in general, and it can be easy to take on credit card debt for other purchases.

Final thoughts: Find your best appliance financing

Purchasing new home appliances can be expensive and sometimes surprising if a major appliance suddenly fails. If this happens to you and you haven’t had the time to save up for a big, unexpected purchase, appliance financing options are available for consumers seeking a more affordable option for making these large purchases.

If you think a personal loan is your ideal choice for appliance financing, 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.