Aug 27, 2024
If you’ve suddenly needed a new refrigerator, or your washer and dryer no longer do the job, you know that appliance financing can become an unexpectedly important decision.
Whether you’re facing an emergency or simply want to upgrade your appliances, you’ll have to make decisions beyond just the make and model. You may even have to choose from among a variety of ways to pay.
To help you make an informed financial decision, we’ve broken down the main things to know about appliance financing. Keep reading to learn what appliance financing is, what you can use it for, and what to keep in mind when deciding how to pay for your new appliances.
Appliance financing provides funds to buy household appliances, such as refrigerators, washers, dryers, or ovens. 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.
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.
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, can cost tens of thousands of dollars. Replacing appliances when you move into a new home may also be a major expense.
A new washing machine generally starts at about $400 but can go well into the thousands.1 New dryers can start at $300 but may also cost significantly more.2
A refrigerator may cost as little as $500, though luxury built-in models can cost more than ten times as much.3
There are many types of cooktops, stoves, and ranges on the market. Whether electric or gas, some start at a few hundred dollars, though the price of luxury models can reach into the thousands.4
An oven set into your wall can cost even more than a typical range. Like other appliances, you’ll find a wide range of prices for wall ovens, starting below $500 and rising much higher depending on the model.4
Not every home has a dishwasher, but many people enjoy the convenience. A new dishwasher can be bought for as little as $400. High-end dishwashers with special features can be much more expensive, and there are many options in between.4
If you have an outdoor patio, a built-in gas grill, pizza oven, or smoker can add a nice touch. These outdoor cooking additions typically start at about $150 on the low end but, like indoor appliances, can reach as much as several thousand dollars for luxury models.5
There are multiple financing options available to you when you’re looking to purchase new appliances. Here are five you might want to consider.
In-store financing may be offered by retailers to customers who purchase an appliance, through direct lending programs or a store credit card.
Store cards may be easier to qualify for than general-purpose credit cards, but they may have a higher annual percentage rate (APR). Keep in mind that a “zero-percent interest” offer with a store credit card may only apply to a promotional period, after which interest rates may be applied.6
Some stores offer leasing options, in which you pay for the use of a new appliance over a period of time, without needing any financing from lenders. Also known as rent-to-own, these programs usually require no credit check and often allow you to stop making payments and return your appliance to the store if you change your mind.
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, often without interest. BNPL plans, however, tend to be short term, and they may not help you build good credit because the loan is often not reported to a credit bureau unless a payment is missed.7
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.
Some credit cards come with a type of insurance called purchase protection, which can make them a good option for large purchases such as new appliances. If you use a credit card, pay attention to the interest rate and its impact on your monthly payments.
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.
When renovating or remodeling, a personal loan can help pay for more than appliances. It can also be used for such things as paying contractor fees, purchasing new backsplash tiles for your kitchen, buying décor for your patio, plus much more.
Personal loans feature a fixed interest rate with one set regular monthly payment, so you are able to create a predictable budget based on your finances. In addition, Discover® Personal Loans offers flexible repayment terms, and your funds can be sent as soon as the next business day after your acceptance.
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.
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.
Before choosing how you’ll finance your new appliance, you should research each option and consider these factors.
Some in-house financing options might require that your purchase exceed a certain amount.
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 ensure that they fit within your budget.
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.
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 as long as you pay on time.
The best time to buy appliances may vary from retailer to retailer. Many stores offer discounts and sales around specific times of the year, including Presidents’ Day, Memorial Day, Labor Day, the Fourth of July, and New Year’s. Other key dates to watch for include retail holidays—such as Black Friday and Cyber Monday—back-to-school sales, end-of-season sales, and clearance sales for previous models.
If you are able to wait and to plan to shop around these times of the year, you may save on your next large appliance purchase.
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, whether it’s for new appliances or some other upgrade. Plus, you’ll have one set regular monthly payment and know when your loan is due to be paid off.
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.
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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