How Can a Personal Loan Assist You in Purchasing Home Furniture?

Benefits of Personal Loan for Furniture

There are many reasons to finance your new furniture with a personal loan. Among these are -

1. Collateral-free

A furniture loan is an unsecured form of financing in which the lender does not request you to put up a collateral as guarantee for repayment. The collateral can be either the item you purchased or any other asset you own, just like in car-loan or two-wheeler financing. But in personal loan this is not required.

The lender checks your credit score, income source and repayment capability before granting you the loan. Though it is an unsecured loan repaying your EMIs on time is very crucial. The lender has the right to file a lawsuit against you. And you may lose various possessions at the discretion of the court. Also, it will impact your credit score which will make it difficult for you to secure future loans.

2. Easy Application

You do not need to visit a lender's branch for buying furniture on loan. You can apply for this loan product through a financial institution's official website or a digital lending app. Share your name, income, age, and other information on the website/application, and upload a few documents.
 
Whether you buy furniture from an e-commerce website or directly from the store, you will get the 'Buy on EMI' option. Nowadays, e-commerce platforms have partnered with several financial institutions to provide easy financing options. The offline stores also have representatives from different lenders who can help you buy the products on finance.

3. Instant Approval

You do not have to wait months to get your preferred sofa set. Lenders approve this loan in minutes and disburse funds in 24-48 hours. All this is possible because of the use of cutting-edge technology.
 
The web-based or mobile application of new age lenders deploys Artificial Intelligence (AI) and Machine Learning (ML) technology. It aids in quick furniture loan application evaluation and credit appraisal.

4. Multiple Usages

Remodelling a home is not limited to replacing old furniture. You will also require funds to replace appliances, change wall colours, get the repairs done and so on. So, do you need to get a separate loan to meet the other requirements? The simple answer – is "NO".
 
Personal loans for furniture come with usage flexibility. You can use them for several purposes, and your lender will not require you to provide a reason for doing so. The loan amount is credited to your account, and it is completely upon you to determine the end usage.

5. Flexible Repayment Tenure

The repayment period is critical for budget management. It has a direct impact on your EMI and interest payments. If you choose a longer payback period, the applicable EMI will be much lower, but the interest payable amount will rise.
 
With a furniture loan, you can choose your repayment period. Use the personal loan EMI calculator to determine the optimum loan amount. 
 
Check the table to understand the repayment period's impact on the EMI and interest. 
 

Parameters	Repayment Tenure
	12 months	24 months	36 months	48 months	60 months
Loan amount	Rs 5,00,000	Rs 5,00,000	Rs 5,00,000	Rs 5,00,000	Rs 5,00,000
Interest rate	11%	11%	11%	11%	11%
EMI	Rs 44,424	Rs 23,537	Rs 16,607	Rs 13,167	Rs 11,122
Interest outgo	Rs 33,093	Rs 64,882	Rs 97,858	Rs 1,32,012	Rs 1,67,333

 
You can see how a loan with the same amount and interest rate but a different repayment period affects your budget.

6. Boost Credit Score

If you intend to apply for a large loan in the future for a house purchase, office setup, or other purposes, availing a furniture loan can be extremely beneficial. Given the small amount of up to Rs 5,00,000, repaying your debt obligations on time will significantly improve your credit score.

What Factors Should You Consider When Applying for a Furniture Loan?

Although a personal loan for furniture is easily available, you should not apply for one without first considering the following factors.

• Examine your credit report before applying for a furniture loan. Check for any negative remarks, such as late EMIs, multiple hard inquiries, and previous cases of settlement. Poor comments on the report will result in the loan application being rejected or higher interest rates.
• Understand your debt-to-income ratio as well as your other financial obligations. Financing furniture will only lead to a debt trap if you have several debts and very little disposable income.
• Always have a solid repayment plan in place. Use festival bonus, windfall profit, or increment to increase your EMI amount at regular intervals if possible. After the first twelve months of borrowing, you may also choose the prepayment option. These small steps will improve your creditworthiness while saving you money on interest payments.
• Furniture loses its value over time. If you replace your sofa or dining table every 3-5 years, this loan product is not for you.
• Consider the uncertainties like job loss, financial crisis, health issues, or other unforeseeable factors before applying for a loan. Keeping your obligations at a minimum is a smart idea.

Also Read: Learn Everything About Personal Loan Disbursal Process

To Conclude

Personal loans for furniture are available from a variety of lenders. You only need a steady income, stable employment, and a good credit score. Because the loan is available without collateral, you must have a solid repayment plan to avoid getting hit with a hefty penalty. Also, make sure to do thorough research comparing the interest rates and charges offered by different lending institutes.

Frequently Asked Question

How quickly can I receive funds after approval?

Once approved, funds can be disbursed within a few days, allowing you to promptly purchase the furniture you need.

What happens if I cannot repay the loan on time?

Missing repayments can affect your credit score and may incur penalties or additional fees. Contact your lender immediately if you foresee difficulties in repayment.

What should I prepare before applying for a personal loan?

Gather documents such as identification proof, income statements, and credit history reports to streamline the application process.