How to Finance a Couch

Whether you’re moving into a new home or redecorating, one of the most expensive decor items is a couch.  Of course, that depends on what you’re purchasing. Couches can range from a basic $400 loveseat to million-dollar designer sofas, but most people pay between $1,500 and $3,000 for a new sofa. 

Balancing design, comfort, quality, and cost is unique to each family. Regardless of your taste, financing a sofa or new living room decor can be a substantial cost on top of regular expenses. Read on for 10 ways to finance a couch to decide what option works best for you.

If you need cash to finance your couch, MoneyLion can help! MoneyLion offers a service to help you find personal loan offers based on the info you provide. You can get matched with offers for up to $50,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you. You can also use the loan funds to buy a couch.

How does couch financing work?

Couch financing, like any other financing, usually involves some sort of loan. However, for the sake of simplicity, we’ll assume the first way to finance a couch is by paying in cash. You’ll save on interest and won’t have to worry about future monthly payments.

If that’s not an option, you can choose from in-store financing to personal loans, credit cards, or peer-to-peer lending. In all of these cases, you’ll need to make monthly payments towards the loan principal plus interest. If you can pay off the full purchase price before interest charges build up, you’ll save more in the long term.

For example, some stores offer a 0% APR for 12 to 18 months after a couch or furniture purchase. Likewise, you could use a credit card with a 0% APR introductory offer to finance a couch. 

If those options don’t work, a personal loan or other loan with interest is always an option. And then there’s borrowing from family or friends. Which works for you? Read on to understand the pros and cons of each and how much you can expect to pay for the convenience of financing. 

10 Financing options available for purchasing a couch

Ready to finance a couch? Here are the 10 best options. 

1. Cash

If you pay in cash, there are no credit checks, minimum credit score requirements, or monthly payments after the purchase is complete. Instead, you’ll pay the full value of the couch upfront. While this can save you more in the long term, you’ll need to save up ahead of time to ensure you have the cash reserves to make the purchase. If you’re paying from savings, it also means depleting your savings for the purchase. 

Pros

The advantages of buying a couch with cash are:

• No monthly payments.
• No interest payments.
• You’ll own the couch outright from the first month.

Cons

The disadvantages of buying a couch with cash are:

• You need to save up the full value of the couch.

2. In-store financing

In-store financing is a type of consumer financing. You can purchase the couch and finance the purchases at the physical retail location. This option is best for consumers who cannot get a personal loan or when the store has a 0% APR offer. This option is usually only available at department stores or major furniture stores, but some smaller furniture stores may also offer in-store financing. Many stores will perform a hard credit check, which can temporarily impact your credit score. 

While minimum credit score limits vary by store, you may qualify for a lower interest rate with a higher credit score. Minimum credit scores range from 580 to 620, while optimal credit scores are 670 or higher. Usually, you can apply in-store and will get instant approval or denial. 

Pros

The pros of in-store financing include:

• Easy to qualify.
• You’ll usually get instant approval or denial.
• Some in-store financing offers a 0% APR for 12 to 18 months to help you save more on interest.

Cons

The disadvantages of in-store financing include:

• You may get higher interest rates than with other payment options. 
• Some stores perform a hard credit check, which can affect your credit score. 
• Some stores may charge retroactive interest after an introductory interest-free period.
• Not all stores have in-store financing.

3. Personal loan

A personal loan is a flexible financing option. You can use it for anything, from financing a couch or home renovation to consolidating credit card debt or paying medical expenses. A personal loan can be a good option if you purchase more than a single couch or need to combine the purchase of a couch with debt consolidation. 

Personal loans require a credit check. You’ll usually need a minimum credit score of 580, but some lenders have higher requirements. The higher the credit score, the greater the possibility of a lower interest rate. Interest rates on personal loans are significantly lower than on credit cards and payday loans. 

Pros

The advantages of a personal loan include:

• Fixed interest rates, and thus fixed monthly payments.
• You can often prequalify without a hard credit inquiry.
• Get funds for the purchase within a few days or even the same day.

Cons

The disadvantages of personal loans include:

• Lenders may charge upfront origination fees.
• It’s difficult to qualify with poor or no credit. 
• Interest rates can be high for borrowers with lower credit scores.

4. Credit card 

Putting major expenses on a credit card is usually only a smart financial strategy if you know how to manage the credit card and plan to pay it off before interest is due. Otherwise, the interest rates may be significant when factored into your budget. Other options to finance a couch could be less costly.  

If you have a credit card introductory offer, buying a couch with a credit card and paying it off on time can be a strategy to earn extra rewards or bonus points. On the other hand, if your credit card has a 0% APR offer, you could buy a couch on the credit card and plan to pay it off before the introductory offer ends. 

For example, if you buy a $3,000 couch on a card with an 18-month 0% APR, you could pay $176.50 monthly for 17 months to pay off the debt before interest is due. 

If you already have a credit card, you don’t need a credit check or minimum credit score before buying a couch with your credit card. However, notifying your card issuer of the large purchase you plan to make can ensure the purchase goes through without issues. 

Pros

The advantages of buying a couch on a credit card include:

• Easy to plan for purchase and repayment without applying for a loan or needing to stick to specific repayment schedules. 
• No need for a new credit application (if you already have the card, and the limit is high enough).
• During a 0% APR promotion you’ll save on interest.
• With a new credit card offer, you could earn bonus “points” from the credit card to use for cash back, travel credit or other benefits.

Cons

The disadvantages of financing a couch with a credit card include:

• High interest rates (average APR of 27.89%) if you don’t pay it off on time.
• Depending on the sofa price and total credit line, it could negatively impact your credit score and credit utilization ratio, as exceeding a credit utilization of 30% can have negative consequences for your credit. So if the sofa is $3,000 and your credit line is $5,000, your credit utilization ratio will be seen as “too high”.

5. Earned wage access (EWA)

Earned wage access (EWA) is also called instant pay, early wage access, accrued wage access, earned income, or on-demand pay. With EWA, you may be able to access your usual salary ahead of the payday schedule. This doesn’t require a credit check and is best for employees of large companies or businesses with consistent wages. 

Pros

The advantages of EWA include: 

• Typically interest-free early payment.
• A way to pay for a coach without taking a loan.
• Usually no credit check.

Cons

The disadvantages of EWA include: 

• Not offered by all employers.

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6. Payday loan 

Payday loans are typically short-term, high-interest loans. As the name implies, they’re designed to help you cover expenses until the next payday. Some payday lenders offer these loans without a credit check, while others will perform a credit check. Payday loans may help borrowers who expect a large payment within a couple of weeks, and who don’t have other financing options like a credit card, personal loan, or Instacash. 

Pros

The advantages of a payday loan are:

• Get instant approval in most cases.
• Some lenders offer payday loans without a hard credit check.

Cons

The disadvantages of payday loans include:

• Interest rates for these products tend to be higher than other options
• Short-term loans designed to be paid back within two weeks aren’t usually the best option to finance a couch because of high interest rates and the risk of getting caught in a cycle of debt. 

7. Secured loan

A secured loan requires you to offer equity in exchange for the loan. This can include real estate, savings, retirement accounts, or other assets. Secured loans are best for borrowers who don’t have other loan options, or who want lower long-term interest rates. 

One type of secured loan is a home equity line of credit (HELOC). This revolving credit line is backed by your home. Likewise, a home equity loan is a type of secured loan backed by the equity you’ve built in your home. These common secured loans are easier to qualify for, as long as you’ve built up equity in your home. 

Pros

The advantages of secured loans include:

• Possibly lower introductory rates.
• HELOCs offer a flexible credit line to use and pay off on your own schedule.
• Other secured loans usually have fixed interest rates.

Cons

The disadvantages of secured loans include: 

• You need home equity, savings, or other assets with value to secure the loan.
• If you can’t pay off the debt, you risk losing the asset securing the loan. 

8. Payday alternative loans

Payday alternative loans include online loans. These short-term loans may offer easier qualification requirements, no credit checks, or no interest. Payday loan alternatives are best for borrowers who expect to be able to pay off the full loan amount in the short term. 

Pros

The advantages of payday alternative loans include:

• Easier qualification requirements than personal loans.
• May not require credit checks.
• Some come with low or no interest charges for a short-term loan.

Cons

The disadvantages of payday alternative loans include: 

• These loans are usually short-term, so they aren’t the best option if you need to pay off the couch over a year or more. 
• Some payday alternative loans charge high interest rates or fees. 

9. Peer-peer lending

Peer-to-peer lending (P2P) is an emerging option for securing loans. Instead of visiting a bank or applying online, with peer-to-peer lending (P2P), you can borrow money from other individuals through lending platforms. While peer-to-peer lending often comes with higher interest rates, you could also secure a loan with lower interest. P2P lenders usually look for credit scores of at least 600 or higher.

Pros

The advantages of P2P lending include:

• Easier to qualify for than some other loans, especially if you have a low credit score.
• You could get access to funds within days.
• Search for P2P loans with terms that meet your needs, giving you more flexibility.

Cons

The disadvantages of P2P lending include:

• No insurance or government protection for your funds (or for lenders)
• Some jurisdictions do not allow peer-to-peer lending 
• You won’t always get funded right away. 
• Borrowers with a low credit score can struggle to qualify. 

10. Borrow from family and friends

Borrowing from family and friends can be a polarizing topic. If you are comfortable asking a friend or relative to borrow the funds, you could potentially save on interest. However, you also risk straining the relationship. 

If you decide to borrow from family or friends, be sure to make a written agreement of repayment terms and interest, and stick to it. If this is an option, you could get money the same day with no credit checks and no hassle. 

Pros

The advantages of borrowing from family or friends include:

• Since you are making an agreement with a friend, they may agree to a lower interest rate. 
• Access to cash quickly, often even on the same day, depending on the liquidity of your friend or family member.
• Set repayment terms to meet your needs.

Cons

The disadvantages of borrowing from family and friends include:

• Possible strain to relationships or arguments stemming from unmet expectations.
• Possibly more of a hassle than applying for a loan or choosing other payment options if it strains your relationships. 

Should You Finance a Couch?

Sometimes the best strategy is delayed gratification. If you can use personal savings or cash to pay for the couch, you don’t have to worry about interest rates, credit checks, origination fees, or repayment terms. However, if you choose to finance a couch, carefully compare interest rates and terms to find the loan option that best fits your needs and financial situation. 

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