Appliance financing options for bad credit

Household appliances help homeowners perform daily tasks more easily. Whether it's a dishwasher, stove, washing machine, or clothes dryer, these appliances handle the dirty work so you can spend more time with family. 

However, with many models ranging from $500 to $1,000 or more, buying a new appliance or replacing your existing one is often a big hit to your family's budget. Appliance financing is a way to spread that cost over time to keep the monthly payments more manageable. Here are six ways to borrow money to buy appliances, even when you don't have a perfect credit score.

6 options for appliance financing

According to HomeAdvisor, buying a new set of appliances can cost more than $10,000. Whether you need all new appliances or are just replacing one of them, some people take getting approved for appliance loans for granted. However, appliance financing for bad credit can be challenging, even if you have a good job and can afford the payments.

Retailer financing

Many retail stores selling appliances offer in-house financing or a store credit card through a third-party lender. This form of appliance financing allows customers to get approved at checkout or by using existing store credit. Retail credit is often easier to get approved for than traditional bank credit, so it is a good option for appliance financing with bad credit.

Sometimes they have appliance financing offers with 0% interest or low-interest terms for 6 to 12 months or more with a qualifying purchase. Be careful with these offers because sometimes the interest accrues and is added to your balance at the end of the term if you don’t pay off the entire balance.

Credit cards

If you have access to credit cards, it is a good way to get appliance financing with no credit check. Rewards credit cards are an excellent option for appliance financing because you can earn cash back, airline miles, or hotel points on your purchase. The downside is that credit cards tend to have high interest rates, which makes them an expensive option for appliance financing.

Opening a new credit card when buying an appliance can be a smart choice if you have good credit with the credit bureaus. Many credit cards offer a welcome bonus after spending a certain amount, or you may qualify for a 0% intro APR for up to two years, depending on which card you apply for.

Lease to own

Lease-to-own financing is a way to make small weekly or monthly payments toward buying an appliance. Essentially, you’re renting the appliance until you pay it off, then you own it. If you aren’t able to keep up with the payments, the lender will take back the appliance.

While the payments tend to be affordable, this form of appliance financing can be expensive and targeted to borrowers with a poor credit history. The APRs tend to be much higher than other options, which causes the overall price to be much higher than buying it outright.

Buy now, pay later (BNPL)

BNPL loans are becoming increasingly popular because they have high approval rates and often have no interest charges. Some BNPL lenders use a soft credit check, which doesn't affect your credit when applying. While most appliance financing options spread out payments over a longer period, BNPL loans generally split your purchase into four equal payments. The payments are automatically drafted from your linked checking account.

While the smaller, delayed payments can make a purchase feel more manageable, it's important to consider how they fit into your overall budget. Because payment due dates are pushed into the future, it can be easy to take on multiple BNPL purchases at the same time and underestimate how much you'll owe in the coming weeks or months. These automatic withdrawals also leave little flexibility if your financial situation changes, or you don't have enough money in your account when a payment is due.

Personal loans

Personal loans for appliance financing are available from your local branch, online banks, or through online lenders. You receive a lump sum of cash to purchase the appliance (and cover additional costs, if needed). The money is typically paid back over 3 to 5 years, but some banks offer shorter or longer terms.

With a personal loan, you'll receive a fixed interest rate and the same monthly payment over the loan term. If you pay extra on the loan, you can reduce your interest charges. Using a personal loan for appliance financing with bad credit can be challenging since most traditional lenders require Good to Excellent credit to qualify for a personal loan. If you are approved with bad credit, the lender may charge extra fees or a higher interest rate.

Home equity financing

Homeowners have a lower-cost option than renters do when comparing appliance financing options. Tapping your home equity is a smart way to finance large purchases when you want to keep costs down. Home equity financing also allows you to spread the repayment over a longer period of time, if you need to.

There are four main ways to use your home equity for appliance financing:

• Home equity loan. A home equity loan provides a lump sum of cash that is repaid over a set timeframe. It features a fixed interest rate and a consistent monthly payment throughout the loan term.
• Home equity line of credit (HELOC). A HELOC is a flexible financing option with a maximum credit limit. HELOC payment options include interest-only minimum payments or additional principal to reduce your balance and future interest charges. Interest rates are variable, so your payment can change.
• Home equity investment. A home equity investment (HEI) provides money upfront in exchange for sharing a slice of your home’s future appreciation. There are no monthly payments; instead, repayment happens when you sell, refinance, or use another source of funds anytime during a flexible 30-year term. HEIs don’t impact your mortgage. There’s also no income verification, and you can get approved with less than perfect credit, which makes this an excellent option for appliance financing if you have bad credit.
• Cash-out refinance. Refinancing your mortgage tends to be expensive and has the longest application process. This tends to be a bad choice unless for financing appliance purchases unless you have other borrowing needs, like debt consolidation or home improvement projects.

Bottom line

Whether you're replacing a fridge or stove or buying all new appliances, the cost can quickly become unaffordable. Appliance financing allows you to get the appliances today, then pay for them over time with more affordable monthly payments. While most lenders require good credit, there are still ways to buy appliances on credit if you have a poor credit history. Comparing loan options is key to keeping payments low and qualifying for the best rates and terms. If you're a homeowner, you can tap your equity to finance your appliance purchase and qualify for lower rates.