When it comes to furnishing your home, is credit or financing better?On December 22, 2019 by Ana Funchess
Travel and renovation (17%), the purchase of household appliances (16%) and the purchase of furniture (13%) will be the purchases that will be paid the most in a financed manner during this year.
They are data from the trend barometer on payment methods prepared by American Express. To finance itself, 47% will prefer consumer credit. While 46% of them will go to the financing offered by the store where the purchase is made. But which option is best for you?
How is store financing
Many stores that sell furniture or appliances also have the option of financing purchases. In this way, customers can pay them in monthly installments instead of a single payment when making the purchase. As the main objective of these establishments is the sale of their products, it is logical to think that they will offer more favorable financing conditions. But it’s not always like this.
It is true that many department stores offer interest-free financing if the expense is greater than a certain amount or if a defined repayment term is chosen. Idea or El Norte English have offers such as being able to pay in installments at 0% APR. But other stores such as CreditMarkt, for example, offer financing with costs very similar to those of a credit card.
How is bank financing
Within the offer of loans in banks or credit financial institutions, two types of financing can be found. On the one hand, credit cards, which will allow you to earn a credit of between 600 and 8,000 dollars. With a cost of around 21% APR for deferred payments.
On the other hand, we find consumer loans, which allow us to obtain financing from 1,000 dollars. And with an average cost of 8.74% APR (according to the date of the Penny Wise Bank). Although, as they point out from the bank comparator HelpMyCash.com, depending on the purpose of the credit this cost could increase.
So which one to choose?
If the store where you want to buy the furniture offers 0% APR financing, this is probably the best alternative. However, it is important to look at the conditions. As the minimum amount for finance, the repayment terms or the dates on which purchases must be made.
If, on the other hand, the store where you want to buy the furniture does not offer interest-free financing, it will be necessary to compare between several offers. Both from the credit card itself, as from the store or banks.
Although looking at the cost will be the indispensable condition to know which is the cheapest credit, characteristics such as the maximum amount to be financed, the repayment terms or even how quickly the money will be available should also be taken into account.