Should You Finance Appliances?

Some people love financing big purchases because it keeps them from using their savings and gives them the convenience of getting what they want when they want. Does this mean that financing the purchase of appliances like a television, refrigerator, stove, or washer and dryer is a good idea?Keep reading to find out.

The Pros And Cons Of Appliance Financing

When should you finance an appliance purchase? When you don’t have the cash to pay for it upfront because, without financing, you’ll have to wait until you have enough cash saved to make that purchase.

Who else should finance appliances? Someone who does not want to empty their savings account to get a new refrigerator or other appliance. Spend your savings, and you may not have any cash when a real emergency happens that cannot be financed with ease.

The main benefit of appliance financing is that it lets you purchase that essential item when you need it.For instance, if your refrigerator dies, you may need to run to the nearest store to pick up a new one, so you don’t spoil all of your food. If you have no cash to make the purchase, you can use financing to get the fridge now, make sure all your food is cold, and make payments over time. Make those payments on time, and you could also build your credit in the process to get cheaper loans in the future for other large purchases like a car or home.

What’s the downside to financing? Unlike paying cash upfront, it’s not your cheapest option. With some types of financing, you’ll incur interest charges that make the purchase more costly and origination or late fees that can hit your pocket hard. Paying in cash does not carry any of those risks.

The Different Types Of Appliance Financing

When you need to buy an appliance with financing, you will typically run into these standard options:

Credit Card

If you want to finance an appliance purchase without any interest, applying for a credit card that has a 0% APR promotional period could be just what the doctor ordered. You’ll need strong credit for this option, plus a bit of patience. Approval could come within minutes, but you may be waiting for one to two weeks to receive your card so you can use it.

As long as you pay off your balance before the promotional period ends (around 12-21 months), you could enjoy an interest-free appliance purchase here. Use a regular credit card, and you’ll be paying the interest rate it charges.

In-Store Financing

Does your favorite home improvement store offer in-house financing? Then that could be an option if you have at least fair credit (580-669 score). Depending on the store, their in-house financing could offer zero percent interest if you pay off the appliance by a specific date. And if they give you a store credit card, you could use that to get a discount on future purchases, such as other appliances.

Rent-To-Own Stores

Borrowers with bad credit who want to avoid credit checks or down payments sometimes pick this option.It may be the costliest of them all due to interest and fees, but it allows you to make small payments each week or month and take the appliance home. Stop payments, and you’ll need to return the item. Make payments for a year or two, and it could be yours, but at a much higher cost than if you just paid cash.

Personal Loans

Here’s another appliance financing option that can get costly due to interest, plus origination fees, late fees, etc. Unsecured personal loans use your credit history and income to calculate your interest rate, and they often offer quick approval and funding. If you can get a good APR with a personal loan, you may find it to be a convenient form of appliance financing.