Should you take out a loan to furnish your new home?

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

If you’ve bought a house that you need to furnish, you might not have the money to pay for it right away. Especially if you’ve emptied your savings account to make a down payment and cover moving costs.

You could take out a loan to finance your furniture, but is it a good 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 allows you to borrow money for any purpose, and the stronger your credit score, the more likely you are to get an affordable interest rate.

Borrowing through a personal loan for furniture is usually better than taking out a credit card and accumulating a balance. Not only do credit cards typically charge much higher interest, too high credit card debt can hurt your credit score.

The Ascent’s selection of the best personal loans

Are you looking for a personal loan but don’t know where to start? Ascent’s choices for the best personal loans help you demystify the offers available so that you can choose the one that best suits your needs.

See the selections

But before taking out a personal loan to buy furniture, ask yourself a big question: can it wait?

When you move into a new home, you need to have a bed and a dining table. But there’s a good chance you already own these items. If you have enough essential furniture, you might want to wait to buy more until you’ve saved up the money to pay for it without borrowing.

Every time you take out a loan, your purchases cost you more, since you pay interest on it. A $ 1,200 sofa, for example, could end up costing you $ 1,500 if you have to borrow and earn interest. It’s usually best to avoid going into debt if you can, and while it’s natural to want a house that’s fully furnished, there’s also no rule that you can’t have more bedrooms. empty until your savings account is full.

Other options

While it’s worth avoiding borrowing money, there may be a more affordable way to finance furniture outside of a personal loan. First, look at the store’s financing. You may qualify for an interest-free or low-interest finance program if you have good credit and can pay off your purchase quickly (say, within a year).

Another option is to charge the furniture to a 0% interest rate credit card and pay off your balance before the interest starts accruing. This option is viable if you know you will have money soon.

For example, if you open a credit card with a 12-month 0% introductory interest period and know you’ll get a big enough end-of-year bonus at work, then this route might work well. But be careful, there is a risk involved in using a 0% interest rate credit card, so make sure you can definitely pay off that balance.

Taking out a personal loan to buy furniture is not a bad idea, but it is not the best idea either. Unless you’re talking about items that you can’t function without, you’d better wait to furnish your home until you can cover your purchases. That could mean throwing an ottoman in your den and welcoming guests on your old futon until you can throw a nicer set for your spare bedroom. But if that’s what it takes to avoid getting into debt, it might be worth it.

The Ascent’s Choices For The Best Debt Consolidation Loans

Want to pay off your debts faster? Check out our list of the best personal loans for debt consolidation and lower your monthly payments with a lower rate.

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