African American female customer choosing furniture.

Furniture Loan: Does It Make Sense For You?

Miranda Crace7-Minute Read
UPDATED: July 26, 2023


Whether you’re shopping for a new bedroom set or a living room couch, you’ve probably experienced sticker shock over the price of furniture these days. The cost of purchasing several new pieces of furniture at once – when you’re remodeling or filling a new home – can be daunting.

Paying for furniture out-of-pocket will work fine for those who can afford it, but alternative payment methods are also available. Let’s take a look at the pros and cons of taking out a furniture loan and consider other ways to finance a large furniture purchase.

What Is A Furniture Loan?

A furniture loan is a type of unsecured loan that can finance any kind of furniture purchase. Some loan lenders offer “furniture loan” options, but the term “furniture loan” usually refers to simply using a personal loan to pay for new mattresses, couches or any other type of furniture.

How Does Financing Furniture Work With A Personal Loan?

If you want a personal loan to cover the cost of new furniture, you can apply for funding through a traditional bank, online lender or credit union. Since the personal loans used for furniture purchases are unsecured, as most personal loans are, you’re not required to put down collateral to secure the loan.

If you’re approved for a furniture loan, the next step is to review your loan terms, which include information about your repayment term length, fees and interest rate. Interest rates for personal loans range from around 4% – 36%, with the percentage based on your credit score, income and other financial factors.

After receiving your lump-sum payment, you’ll begin repaying the loan amount in monthly installments and continue until you’ve paid the loan in full.

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The Pros And Cons Of Using A Personal Loan For Furniture

Before you apply for a furniture loan, it’s important to understand the benefits and drawbacks of this payment method. Next, we’ll review the pros and cons of using a personal loan to pay for furniture.



Fast funding time 

Higher total cost

Fixed payment schedule

Nonessential debt

Lower interest rates

Personal loan fees

The Pros Of Using A Personal Loan For Furniture

If you use a personal loan to finance your furniture, you can take advantage of the following benefits, which we noted in the table above but explain in greater detail below.

Fast Funding Time

Once you’ve been approved for a personal loan, you can typically collect the payment within a few business days. This means you’ll be able to quickly access the funds to pay for your furniture and bring it home sooner.

Fixed Payment Schedule

Since personal loan terms are set in stone, you can adjust your budget to include the new monthly payment. Making on-time payments may help improve a borrower’s credit score, especially if they have a relatively low credit score.

Lower Interest Rates

When considering how to pay for new furniture, don’t forget to account for the added interest payments. Luckily, personal loans usually have lower interest rates than high-interest credit cards. Keep in mind that competitive interest rates are only available to qualifying borrowers.

The Cons Of Using A Personal Loan For Furniture

Unfortunately, furniture loans also come with drawbacks, including the ones we’ve highlighted in the table above and will cover in more depth below.

Higher Total Cost

Since personal loans require you to repay the loan amount plus interest, you’ll end up paying much more than the original price of the furniture. That’s why it’s important to calculate the amount of interest you can expect to pay, before signing on the dotted line for the loan.

Nonessential Debt

Although you want your home to feel comfortable, taking out a loan to pay for furniture may not be worth it. You could end up making furniture payments for months, or even years, when you could’ve put that money toward a more necessary purchase, like a house or a car.

Personal Loan Fees

A major downside to personal loans is that most lenders charge additional fees. In addition to your monthly payment plus interest, you can expect to be charged an origination fee and possibly a prepayment penalty. If you make a late payment or miss one altogether, your lender may charge even more fees.

How To Finance Furniture Without A Loan

If you don’t think a furniture loan is right for you, several other financing options are worth considering. Let’s take a look at some other ways to finance your next furniture purchase.

1. Consider In-Store Financing

When you’re shopping at a furniture store, you’ll likely hear or see offers to pay using in-store financing. This is a common way to finance furniture, and it’ll require you to apply for credit at that retailer.

Most in-store financing programs allow qualified borrowers to finance their purchase at a 0% annual percentage rate (APR) for a preset amount of time. The benefit of this payment method is that you can avoid paying interest if you settle the debt before the introductory period ends. Plus, you can take your furniture home sooner.

But the major red flag of this payment option is that your interest rate will skyrocket after one missed or late payment. Be sure you can afford the monthly furniture payment before using in-store financing.

2. Open An Interest-Free Credit Card

If you’re determined to avoid paying interest on your new furniture, another option is to open an interest-free credit card. Like in-store financing offers, 0% APR credit cards allow borrowers to open a line of credit with a zero-interest introductory period.

Ideally, you’ll use this payment method to pay off the credit card debt before the end of the promotional period, which can last up to 2 years. With an interest-free credit card, you can spread out your payments on the furniture and avoid paying interest. However, if you still have an outstanding balance when the introductory period ends, be prepared to pay back interest.

3. Use The Furniture Store’s Layaway Program

Along with in-store financing, some furniture stores offer layaway programs as a payment option. Once you choose one or multiple pieces of furniture to buy, you can reserve them on layaway, meaning that the store will hold them until you pay off the total in installments. It can be difficult for people with bad credit to find furniture loans, making layaway programs an attractive option.

Although most layaway programs don’t charge interest, they come with some drawbacks. One is that you may be required to fork over a down payment or a one-time fee before you start making payments. Another downside is that most stores charge hefty fines if you change your mind about buying after putting the furniture on layaway.

4. Choose A Rent-To-Own Option

Some retailers may offer a rent-to-own option instead of a layaway program. Rent-to-own (RTO) allows you to take home a piece of furniture in exchange for a weekly or biweekly installment for a set period of time. At the end of the term, you can choose to purchase your furniture or return it to the store.

While an RTO option doesn’t require a credit check or charge interest, you could still end up paying more for your purchase than if you paid with cash. For instance, let’s say you find a $600 couch that comes with an RTO option to make a $40 weekly payment for 24 weeks. If you choose the RTO plan, you’d end up paying a total of $960, meaning you’d overpay by $360.

And, if you miss one of the weekly payments, the store may repossess your furniture. Thankfully, defaulting on an RTO payment won’t affect your credit score, but you’ll be out the money you’ve already paid in weekly installments.

5. Pay With Cash

Using your personal savings is the easiest way to pay for new furniture. This payment method eliminates the need for additional lines of credit, interest or fees.

If you’re planning a home project – such as creating the ideal work-from-home office – that requires new furniture, consider putting money aside in a designated savings account. Or research budgeting or money-saving apps that can help you work toward your financial goal.

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How Do You Get A Furniture Loan?

If you’ve considered all options and decided a furniture loan is the way to go, let’s review the steps to take before applying for this type of credit.

  1. Dig into your credit report. When applying for a personal loan, verify that your credit report is accurate and up to date. If you find errors, fix them before turning your application in.
  2. Compare multiple loan offers. To guarantee you’re getting the best possible loan terms, shop around to find the lender with the lowest interest rate.
  3. Prequalify for a furniture loan. Once you’ve narrowed down your options to a handful of loan lenders, prequalify to receive details about your loan amount and terms. Typically, this step won’t affect your credit score.
  4. Apply for a furniture loan. To apply for a furniture loan, you’re required to submit several pieces of financial paperwork as part of your application. Be prepared to supply copies of your bank account statements, tax forms, recent pay stubs and other personal identification materials.

Furniture Loan FAQs

Learn more about furniture loans with the answers to the following frequently asked questions.

Where can I find a furniture loan for bad credit?

If you have no credit history or a low credit score, your financing options will be limited. However, you might qualify for a secured loan if you have a valuable item you can use as collateral. You could also opt for a rent-to-own program or layaway since these options don’t require a credit check. However, these payment methods may come with extra fees or inflated prices.

What credit score do I need to finance furniture?

Since some furniture financing options don’t require a credit check, there’s no specific credit score minimum. But if you want to use a personal loan, most lenders require a minimum credit score of around 650 or so.

Should I finance furniture?

Deciding whether to finance furniture depends on your personal situation. Personal loans, credit cards, layaway or rent-to-own programs and cash purchases all come with pros and cons. Comparing all the options will help you figure out what’s best for you.

Does buying furniture with a loan help build credit?

If you use a personal loan or credit card to buy your furniture, paying off the loan or the card could increase your credit score. Your payment history makes up 35% of your credit score, so regular, on-time payments could help you build good credit over time.

Final Thoughts

If you have your heart set on a piece of furniture and need funding fast, a furniture loan may be a viable option. Using a personal loan to purchase furniture allows you to take home your pieces sooner and then pay for them over an agreed-upon period of time. When making your loan decision, be sure that you’re financially prepared to make the monthly payments on time.

If you decide that using a personal loan for furniture is right for you, apply for a personal loan today through Rocket LoansSM.

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Miranda Crace

Miranda Crace is a Senior Section Editor for the Rocket Companies, bringing a wealth of knowledge about mortgages, personal finance, real estate, and personal loans for over 10 years.