- Personal Finance
What You Need to Know About No Credit Check Furniture Purchases
Furniture sales is a competitive industry which depends on the ability to move large inventories of merchandise on a regular basis to make room for the new styles and colors. However, because most furniture represents a major investment for many consumers, the industry must work to facilitate purchases with offers such as no money down, no interest for a year, and no credit check financing.
Just knowing that the bedroom set or elegant sofa you've had your eye on is attainable by signing an agreement to pay in monthly installments is a great incentive to buy. If you research your options in advance and make informed purchasing decisions, you really can successfully furnish your living space beautifully in a financially manageable way.
By doing your homework and learning about the range of terms available in no credit check furniture financing, you can decide what you are able to pay per month and set yourself reasonable limits before you fall in love with that astronomically priced dining room table.
Types of No Credit Check Furniture Financing
One way to obtain furniture almost instantly with a minimum of paperwork and no credit check is the rent-to-own route. There are several national rent-to-own companies which specialize in providing furnishings on a monthly payment basis, and should you opt to keep the pieces, they will apply some or most of your rental payments towards the purchase price.
The catch is that rent-to-own firms have pretty steep overhead costs. Furniture repairs, repossession for nonpayment of damaged goods, customer service and other expenses add up to a highly inflated final price tag for the furniture you buy. In some cases, you may pay twice or three times the value of the furniture by the time your payments are complete, due to the high interest rate they must charge.
Nevertheless, the rent-to-own option can be convenient for furnishing your empty rooms if you are just starting out on your own without even a hook on which to hang your hat. Some national companies offer online shopping with local delivery, making it even easier to furnish your digs.
You will need to provide the following for a rent-to-own arrangement:
- Proof of employment
- A place to live
2. Indirect Lending
When you wish to purchase your furnishings outright, you will probably be financing directly at the store. Beware, however, of who is actually doing the lending. Many furniture stores use third-party finance companies, a practice known as indirect lending, to accommodate those customers who cannot pay cash.
While no inherent drawbacks exist in this type of financing, if you have had a negative experience with a particular finance company on past purchases, you may want to make sure they are not the ones handling your current financing. If you have financed furniture before and are buying in the same geographic region but at a different store, there is a good chance the same finance firm will be involved.
Remember, you are in the driver's seat. You are not obligated to buy if you do not want to deal with the particular indirect lender the store prefers. Chances are you will find items you like just as well at the store down the street who uses a more acceptable finance company.
If you have no objection to the financing offered by the store, expect to provide the following information to obtain no credit check furniture financing:
- Proof of permanent employment (3 months or more at the same job)
- Income verification (pay stub in most cases) of $1000 or more per month, depending on finance company’s guidelines and purchase amount
- Active checking account with no outstanding NSF (bounced checks)
- Permanent address
- Proof that you are a US citizen and over the age of 18
One of the benefits of financing your furniture purchase via indirect lending is that, once you establish your creditworthiness with an independent finance company, you become eligible for their cash advance and other finance programs in case a need arises for quick, emergency funds.
3. Direct Store Financing
While in-store no credit check financing may be harder to find than indirect financing, some stores do finance their own merchandise in order to make purchases more manageable for customers. You may feel more secure dealing directly with your local furniture store than a faceless finance company, but keep in mind that the interest rate you will be paying for the convenience of financing will certainly be no lower than that charged by a finance company.
Because the store is extending credit on the merchandise it has already purchased, it must protect itself from potential losses just like any company. So, even though the sales people might be friendly, keep in mind that the transaction is strictly business. Make sure you know the terms of the loan prior to signing on.
Expect that in most cases, the store will insist on checking your credit. Exceptions may be made if:
- You are a repeat customer in good standing
- You are a government employee
- You can provide proof of more than adequate income
- You bring a cosigner to guarantee your loan
The advantage of dealing with in-house financing is that you can speak directly to the finance manager and clarify terms prior to signing the agreement.
A potential drawback is that, if you do not like the interest percentage rate or any other terms, you might feel obligated to sign anyway for fear of losing the furnishings you have chosen.
Questions to Ask Before Signing the Finance Contract
In order to make an informed decision, you should have a thorough understanding of the finance terms you are being offered before you sign. Make sure you know:
- The purchase price of the furniture
- The interest rate, or APR (Annual Percentage Rate) you will be paying
- The total cash outlay you will have made by the end of the finance period
- The number of months the finance period spans
- If you can save interest by paying off your purchases early
- If there is an early pay-off penalty
- If there is an added fee for payments made by check
- If your payments will automatically withdrawn from your bank account
- What is the payment due date each month and what is the late fee
Normal interest rates for financing range from 6.5 to 19.8%; you may pay more for a no credit check loan because it represents a greater risk of default. However, be sure before signing the contract that the interest rate quoted is fair and acceptable to you.
You may choose a no credit check option, despite paying more, because you have defaulted on payments in the past or have not yet established a credit history. For some people, it is the only way they can obtain financing to make necessary purchases. For others, it is a way of protecting their credit score by limiting requests from loan companies, which may automatically cause a reduction in their credit rating.
Whatever your reasoning, no credit check furniture loans can make furnishing your living space a beautiful reality.