Appliances are an integral part of our everyday life, so much so that you may not really think about them until they stop working. But when your fridge breaks or you realize you need to upgrade your dishwasher, you’ll need to make some important decisions fast. Looking at the expensive prices of appliances you may wonder—can I finance that washer and dryer?
When you’re purchasing appliances, there are multiple ways you can pay that aren’t just cash up front. Financing options include in-store financing, lease-to-own programs, buy now pay later, credit cards, and personal loans. Each of these options come with their own pros and cons and you’ll want to understand them to pick the best for your financial situation.
Read on to learn more about appliance financing options and the considerations of each one.
What is appliance financing?
Appliance financing is an option to purchase household appliances without paying the full cost up front. Appliance loans come in different forms, including a one-time loan that provides a lump-sum payment or a line of credit that is a form of revolving credit.
With a personal loan used for appliance purchases, you’ll have one set regular monthly payment until your loan is paid off. With a line of credit, you’d make at least a minimum payment each month, and there is no set end date for full repayment. The longer you take to pay, the more interest may accrue.
What appliances can you finance?
Financing can help you purchase just about any type of home appliance. It can be used to bring assorted conveniences to the kitchen, finance a washer and dryer for the laundry room, or add other appliances to your home bar, outdoor patio, or any room of the house.
What credit score is needed for appliance financing?
As with any type of loan, if you need appliance financing, lenders will check your credit score to determine your creditworthiness. People with a wide range of scores can be approved, however, depending on the loan type and the lender’s criteria.
Having a strong credit score might help you obtain a lower interest rate, because it can be an indication of a greater ability to pay back the loan. Other factors that lenders might consider are your income and credit history. Even if you don’t have a credit history or credit score, you may still be eligible for a lease-to-own or buy now, pay later program. Check with the retailer for their borrowing options.
How can you plan for new appliances?
If you aren’t replacing something that’s gone on the fritz, you may be able to plan for your purchase. Before you begin work on a home improvement project involving appliances, it can help to set goals, plan a budget, and know the steps your project will require. Your appliance purchase can be part of the overall project plan and budget.
Your planning may include saving money in advance of your purchase. And you may even spend less by knowing when appliance sales happen and researching your financing options for the purchase of new appliances.
Keep in mind that the price of each appliance may range from just a few hundred dollars to several thousand. A major project, such as a full kitchen remodel, could cost tens of thousands of dollars. Replacing appliances when you move into a new home may also be a major expense.
What options do you have to finance appliance purchases?
There are multiple financing options available to you when you’re looking to purchase new appliances. Here are five you might want to consider.
1. In-store financing
In-store financing may be offered by retailers to customers who purchase an appliance, through direct lending programs or a store credit card.
Pros
- Often offer a “0% interest" promotional period
- May be easier to qualify for than general-purpose credit cards
Cons
- Once the promotional period ends interest rates will be applied
- Often have a higher APR than typical credit cards
This may be a good option if you’re able to pay the full amount quickly, but you should take your full financial situation into consideration first to avoid high interest rates.
2. Lease-to-own program
Some stores offer leasing options, in which you pay for a new appliance over a period of time, without needing any financing from lenders.
Pros
- No credit check required
- Typically allowed to stop making payments and return your appliance if you change your mind
Cons
- The total cost of leasing may be more than the retail price of the item over time
- You could risk repossession if you miss payments
3. Buy now, pay later
A buy now, pay later loan (BNPL) typically involves making an initial payment at the time you choose an appliance and then paying off the remaining balance in fixed installments.
Pros
- Typically, fast and easy approval process
- Often don’t accrue interest
Cons
- Won’t help you build good credit
- Late payments come with penalties
4. Credit card
Thanks to their ease of use, credit cards remain a popular option for financing new appliances. The exact amount you can spend with a credit card will depend on your credit limit and the balance you are currently carrying on the card.
Pros
- Some credit cards come with a type of insurance called purchase protection, which could make them a good option for large purchases such as new appliances
- Funds are available immediately depending on your credit limit and balance
Cons
- Interest rates can be higher than a personal loan
5. Personal loan
A personal loan is an installment loan that provides you with funds to use for a wide variety of purposes, such as home improvements, consolidating debt, or making big purchases like new appliances.
Pros
- Can be used for any purpose beyond just appliances
- Have a fixed interest rate
- Have one set regular payment
Discover® Personal Loans offers flexible repayment terms, and your funds can be sent as soon as the next business day after your acceptance.
Cons
- Will add to your overall debt
- Late payments can affect your credit score
See how these options compare in some key factors below:
Financing Option | Interest Rates | Repayment Terms | Credit Impact | Flexibility | Risk |
|---|---|---|---|---|---|
In-store Financing | Often include 0% promotional periods, but can get high when period ends | Fixed monthly payments | Hard credit check could impact your score | Fixed installments determined by repayment plan | After promotional periods end, interest can get higher |
Lease to Own | No traditional interest, but cost of leasing can be higher than retail price | Ongoing payments until ownership | No credit check required | Can return item early and stop payments | Over time, your total cost can be very high |
Buy now, Pay Later | Will range from 0% to higher depending on repayment plan length | Fixed monthly payments determined by installment length | Often only a soft check is done with less impact to your score | Fixed installments determined by repayment plan | Loans are not reported to a credit bureau unless you miss a payment |
Credit Card | Often higher than a personal loan | No fixed payoff date, minimum payments required | Credit will be affected depending on use | Only minimum payments are required | Could experience high compounding interest |
Personal Loan | Typically, lower than credit cards | Fixed term | Hard credit check could impact your score | You can often choose your own flexible repayment terms | Will add to your overall debt |
Will researching appliance loans affect your credit score?
Some lenders, like Discover Personal Loans, let you check your rate with a “soft credit pull,” also called a soft inquiry. A soft credit pull helps you see how much money you might be able to borrow, the interest rate, and the estimated monthly payment based on your repayment term. Since it’s not attached to an actual application for credit, a soft credit pull won’t impact your credit score at all.
When you submit a loan application for appliance financing, that will require a “hard credit pull,” which is visible on your report to other creditors and could affect your score.
What should you consider when choosing your financing?
Before choosing how you’ll finance your new appliance, you should research each option and consider these factors before you decide on which option to take.
Minimum purchase amount
Some in-house financing options might require that your purchase exceed a certain amount.
APR
The annual percentage rate will determine the amount you’ll pay to borrow the funds in addition to repaying the principal. By knowing how the APR affects your payments, you will be able to help ensure that they fit within your budget.
Repayment term
When considering any loan, it’s important to decide how many months you’ll need to pay it off, which is known as the repayment term. With a shorter term you would pay more per month but with less total interest overall, while a longer term generally results in lower monthly payments and more interest paid in the long term. You’ll want to choose a repayment term that offers monthly payment amounts you can afford.
Additional fees
Check to see if a lender charges any extra fees to originate the loan or for early repayment. With a Discover personal loan, there are no fees of any kind.
Total cost of borrowing
The total cost of borrowing is the full amount you pay to borrow money over time. This includes the principal, expected interest, and any fees. Understanding the total cost will help you better compare your financing options.
Impact on credit score
Financing or even just applying for financing options can affect your credit score. It’s important to understand where your current credit score stands and how each option could affect it.
Flexibility of repayment
Different financing options can include a range of repayment terms. You should research the repayment terms of each option and determine which is most comfortable for your financial situation.
At Discover Personal Loans, you can design your loan around you. Pick the amount you need and the repayment term from options offered to fit your budget.
When is the best time to buy appliances?
The best time to buy appliances may vary from retailer to retailer. Many stores offer discounts and sales around specific times of the year. Here are some key dates to watch for:
- New Year’s
- President’s Day
- Memorial Day
- Fourth of July
- End of season sales
- Back to school season
- Labor Day
- Black Friday
- Cyber Monday
- Clearance Sales for older models
If you’re able to wait and plan to shop around these times of the year, you may save on your next large appliance purchase.
What are the next steps?
Once you’ve done your homework and researched your appliances and financing options, you’re one step closer to purchasing new appliances for your home.
Remember, there are a lot of choices when it comes to financing, and selecting the right one for your financial situation is important. If you choose a personal loan, you can use it for any home improvement, there is no collateral needed, and you can enjoy a simple repayment structure with fixed rates and predictable payments.
If you’re interested in learning more, you can use our personal loan calculator to estimate your monthly payments based on the loan amount, your credit score, and the length of the loan. It will have no impact on your credit score.
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Frequently Asked Questions
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There are many ways to finance appliances, including in-store financing, lease-to-own programs, buy now pay later, credit cards, or a personal loan. Your individual financial situation will determine which is best for you.
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Lenders will look at your credit score to determine your eligibility, but people with a wide range of scores can get appliance financing. A higher score might mean a lower interest rate though.
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Yes, a personal loan could be a good option to finance appliances depending on your financial situation.
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The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover, a division of Capital One, N.A., or its affiliates.