Appliances are a veritable necessity to live a comfortable life, but they can be expensive to purchase. While some people will save their money to make a planned appliance upgrade, others need to find a reasonable way to finance their purchase of new appliances. An appliance loan is a wonderful solution to consider, and they give you the ability to spread your appliance cost out over several years.
Bonus read – How to Apply for a Personal Line of Credit
Understanding the Appliance Loan
There is a wide range of loan types that can be used for appliance financing. Before you apply for financing, it is important that you research the options and fully understand them. Therefore, you make a wise, informed decision about how you will pay for your appliances.
Limits and Loan Amounts
Many appliance loans will pay for most or all of your purchase price. Some will also cover taxes, the cost to haul away or dispose of old appliances and delivery and setup of the new appliances. Whether you are purchasing one appliance that costs less than $500 or multiple high-end appliances that total tens of thousands of dollars, financing may be available to meet your needs.
What Types of Appliance Loans Are There?
There are three main types of appliance financing that you can consider. These include in-store financing, which may be an installment loan or a revolving store credit card. They also include a home equity loan or a personal loan you apply for through a bank. You may also use your own credit cards to fund the purchase. However, installment loans are generally a preferred option. They can help you to eliminate debt more quickly than is possible through a revolving loan term.
How to Apply for the Appliance Loan
The decision to apply for appliance financing is often easy to make. After all, you may need new appliances in your home, but you may not have funds available to use to make a cash purchase. The process for applying for appliance financing is easy to do. Simply walk through these steps to get the funding you need for your upcoming purchase.
Initially, you need to compare your loan options. If you are making a small purchase, using your own credit card or applying for in-store financing may be a quick and easy option to consider. For those who have more substantial financing needs, consider how much equity is available in your house. A home equity loan may give you affordable loan terms. If none of these options are sufficient for your needs, applying for a bank loan is often a great solution.
Many people will have multiple financing options available to consider. As you compare the options, initially focus on the term. An installment loan is usually a preferred option. However, avoid choosing a very long term. Consider that you may need to replace your appliances every 10-15 years. The last thing you want is to still owe money on your appliances when they reach the end of their useful life. Then compare interest rates, loan amounts, monthly payments and fees as you narrow down your options.
Your appliance financing payment should be affordable for your budget. Review your budget today, and plug in different monthly payments for various loan options available to you. If none are affordable for your budget, you may need to purchase less expensive appliances or save up to pay cash for your appliances.
By taking these steps, you may have been able to find a loan that meets your needs and that is affordable for your budget. The next step is to apply for the loan. Most lenders today have an online loan application. This includes all types of loans that you may have access to you. In-store financing may also have a phone application process that you can complete with the customer service department at the time you make your purchase.
Depending on the type of loan that you select, you be able to complete the entire financing setup process with a single phone call to the lender, or you may have to walk through a weeks’ long loan process. For example, the in-store financing process is usually completed in ten minutes or less. The home equity loan process, on the other hand, may take several weeks or longer to complete.
How Does Repayment Work?
All types of the appliance loan require you to make regular payments to reduce your outstanding debt. However, the repayment process can vary based on your lender’s requirements. Some lenders require you to set up automatic payments as a condition of closing. With this repayment option, you will simply have to ensure that money is available in your account when the payments are being drafted. It is wise to pay more than the minimum amount required by the lender if possible. This will help you to reduce the debt more quickly and to eventually eliminate the debt.
FAQs We Know You Have
The appliance loan is not something that many people are very familiar with, so you understandably have a lot of questions. These are helpful answers to some of the most common questions consumers have about appliance financing.
Q. Is a down payment required?
A. With many types of appliance loan available to choose from through various lenders, there isn’t just one answer to this question. Most appliance financing fully covers the cost of the purchase. However, this is not always the case. It is best to compare your loan options carefully. If necessary, apply with a few lenders to get customized quotes before you make your final decision.
Q. What is a reasonable interest rate to expect?
A. The lowest interest rates available for appliance financing is typically through a home equity loan. The current rates available for home equity loans may be under five percent. Credit card financing, including your current credit cards and in-store revolving financing, may have an interest rate of 28 percent or more in some cases. It is important to review all of the options available to find the best deal possible on your financing.
Q. What is the loan term?
A. The term varies from financing option to financing option. For example, a personal loan from a bank may have a fixed term of five years or less. A home equity loan may have a fixed term of 15, 20 or 30 years. While a longer fixed term creates lower payments, the debt will be paid off more quickly with a short-term loan. In addition, credit card financing as a revolving term that may take many years or even decades to pay off.
Q. Can you get appliance financing with bad credit scores?
A. Each lender has unique requirements for their financing. Some will accept lower scores, such as down to 600. However, if your scores are lower than this, you may need to use an existing credit card or save money to pay cash for your purchase.
Paying for your new appliances can be expensive. Therefore, many people will seek appliance financing to more comfortably incorporate this expense into their budget. With many types of appliance loan available to choose from, you should begin exploring the options as soon as you determine the need to purchase new appliances for your home.