It is a universally acknowledged truth that your dishwasher will break right after you buy a new car, your washing machine will go on the fritz the same week as that big vet bill and your refrigerator will kick the bucket just as you pay the deposit for a vacation.
It seems like there’s never a convenient time to buy a new appliance — and paying for one is no picnic, either. Appliance financing provides another way to cover this often unexpected expense.
When you finance an appliance, you pay for it over time instead of buying it upfront. That leaves you a little more breathing room in your budget, although you could wind up paying more due to interest. Here’s what you should know about this financing option so you can decide whether it’s the right option for you.
What Kinds of Appliances Can You Finance?
You can usually finance all kinds of appliances, whether you’re shopping for your kitchen, laundry room, bathroom, basement, patio, garage or someplace else. Many stores offer financing options for major appliances, luxury appliances, small kitchen appliances and sometimes even personal appliances, such as luxury hair dryers.
For example, you may be able to finance:
— Refrigerators
— Ranges (cooktops or wall ovens)
— Range hoods
— Microwaves
— Dishwashers
— Washers
— Dryers
— Deep freezers or chest freezers
— Grills
— Air quality appliances such as air purifiers or space heaters
— Countertop appliances such as espresso machines
— Vacuums and floor care
Depending on the retailer and the financing method you choose, you may be able to finance multiple appliances at once, like a full kitchen suite or a washer/dryer set. Better yet, time your purchase with the best time of year to buy large appliances to save more money.
Appliance Financing Options
You typically have three main options for financing your new appliance: through the retailer, a personal loan or credit card.
Store Financing
The retailer where you buy your new appliance may offer financing, possibly through a store credit card. For example, Best Buy and Lowe’s each offer special financing on new appliances. At Best Buy, you might be able to finance your new appliance for 18 months at 0% interest; at Lowes, you might finance for 12 months with 0% interest if you pay in full before the term is up. Store financing and promotional offers can change frequently.
“This approach can hurt your credit score a little bit since you would have a higher credit usage, but if you are short in cash and you do need appliances, financing through those store credit cards is a great way to go,” said Zhexu (Edward) Ai, assistant professor at Nicolais School of Business at Wagner College.
A word of caution: Store financing may include what’s called deferred interest, meaning you’ll be responsible for paying interest dating back to the date of purchase if you don’t complete your payments before the promotional period ends. It’s very important to read the fine print of your financing agreement so you understand what could happen if you don’t pay off your purchase before the end of the promo period.
Personal Loan
Another way to finance appliances is with a personal loan. A personal loan usually does not require collateral and will give you fixed monthly payments, a set loan term and a fixed interest rate. You’ll receive the money in a lump sum, which you can use to buy the appliances. Then you pay the loan back over time according to your loan agreement.
Personal loans may offer lower APRs than store financing or credit cards. According to the Federal Reserve, the average interest rate on a 24-month personal loan was 12.49% in February 2024, while the average credit card interest rate was 22.63%.
[Read: Best Personal Loans.]
Buy Now, Pay Later
A buy now, pay later, or BNPL, program lets you split your purchase into a set number of payments, but it’s not a personal loan. Also known as a point-of-sale loan, these installment plans may or may not charge interest or require a traditional credit check.
For example, if you buy a Maytag appliance using the BNPL lender Affirm, you could have an APR between 0% and 36% with terms from three to 36 months. Affirm runs a soft credit check to verify your eligibility but may require more information, such as your checking account details, to confirm. You’ll see your payment agreement up front, so you can understand what your payments and interest will be before you sign up.
Buy now, pay later program terms vary by lender, so make sure you understand the terms of your payment plan before you buy.
Credit Card
You can also use a credit card to finance a new appliance. If you use an existing credit card, be aware of the card’s APR, your due date and the grace period (if there is one). If you don’t pay off the purchase before the end of the grace period, you’ll owe interest on your balance each billing cycle until it is paid off.
Another option is to open a credit card with a 0% introductory APR, which often lasts for 12, 15, 18 or even 21 months in some cases. If you can pay off your purchase within the promotional APR period, you won’t pay any interest.
Pros and Cons of Financing Appliances
While financing a new appliance can help when you’re in a pinch, there are some disadvantages, too.
“Generally speaking, financing a purchase is best reserved for items that either gain value or are necessary but outside of your ability to pay cash for,” says Phillip Parker, founder of CardPaymentOptions.com.
Who Should Finance Appliances?
Financing an appliance is a good option if you can’t or prefer not to pay for the appliance in full up front.
You’ll typically see the best rates and terms reserved for people with good credit. Appliance financing for bad credit may come with high APRs or otherwise less attractive terms. Whether you have good credit or are still building your credit, it’s important to shop around for the best deal — both on the appliance itself and the way you pay for it.
Be careful if you’re shopping for appliances for a new home you’re buying. It’s best to wait until after closing on a mortgage before opening a new line of credit. Mortgage lenders will review your credit file before closing to see whether you’ve opened new lines of credit, and it could affect your ability to close on time and with the expected terms.
Alternatives to Financing an Appliance
If the above methods aren’t right for you, there may be other options.
Rent-to-own
Rent-to-own stores and even some big-box home improvement retailers offer lease-purchase agreements that let you take home the appliance while making periodic payments. You don’t own the appliance until you’ve paid off the purchase.
Secondhand Sellers
If you need an appliance now, consider buying secondhand from friends or neighbors. Searching local resale sites such as Facebook Marketplace can help you find gently-used appliances for sale, which you can use while saving for a new one.
Use Savings
Tap your emergency fund if you have one — circumstances like these are what they are for. Using your savings to buy a new appliance when you need one will help you avoid the interest costs you’d pay if you financed it. Just remember to set money aside in the months to come to replenish your savings.
More from U.S. News
The Best Times of Year to Buy Large Appliances
Deferred Interest: Should You Avoid These Offers?
APR vs. Interest Rate: What’s the Difference?
What You Should Know About Financing Appliances originally appeared on usnews.com
