Financing Furniture At 0% Is For Suckers

Why Zero Percent Financing on furniture is for suckersEvery time I drive by a furniture store I see signage that says something like “THIS WEEK ONLY – 48 Months 0% Financing!!!”

I’m always amazed how these deals are for a limited time because the stores always seem to be running them.

Maybe they just change the length of the financing so that the current sale is actually a limited time offer.

The fact of the matter is, it doesn’t really matter how long the furniture stores are offering 0% financing for. Why?

You should never, ever finance furniture.

Especially if you couldn’t pay for it in cash today.

Why You Shouldn’t Finance Furniture

Furniture is a consumer good and, as you know, I am completely against consumer debt!

Of course, if you had cash to pay for it and decided to finance your furniture to use arbitrage and make some money by keeping that cash in the bank, I’d normally say that’s OK. After all, that’s what I did when I bought my first ever new car.

However, in this particular situation I don’t think financing to use arbitrage is a great idea.

Why Using Financing Arbitrage On Furniture Is A Bad Idea

First off, if you miss a payment on your furniture loan, you’re likely going to pay a very pretty penny. Your interest rate will spike from 0% to 20% or more and that interest could be applied retroactively to when you purchased the furniture.

It’s a very expensive mistake to make.

If that isn’t bad enough, buying furniture on a 0% promo can destroy your credit. Chances are that your credit line will be the same exact amount as your purchase which will result in your credit utilization rate spiking.

This will be a big hit on your credit score because credit utilization makes up 30% of your credit score. I’d hate for a 0% furniture loan to end up causing you to have a higher interest rate on a future mortgage.

That’d cost you thousands, if not tens of thousands of dollars while you’ll only save a small amount on your furniture arbitrage.

Furniture can be expensive and furniture stores know that. By dragging out the price of the furniture into monthly payments with no interest, it makes the furniture seem cheaper and might cause you to end up spending more than you had planned.

Furniture stores know that if you finance over a long period of time, any discount they give would only be a few dollars a month at most. Due to that fact, they’re not going to offer discounts to try to get you to buy.

Instead, they’ll waive the monthly payment in front of your face as a better way to afford the furniture.

So How Should You Buy Furniture?

There is a way to get a discounts on your furniture at these stores, they just don’t advertise it. Instead of financing your furniture or putting it on a credit card to get 1% cash back, try offering to pay in cash.

Many furniture retailers will offer discounts if you simply pay with the green stuff from the ATM. You might be shocked by how much you could save!

Want to save even more money on your furniture? Don’t buy from furniture stores! New furniture is marked up by huge percentages. As soon as you take it home it will lose a ton of value. Much like a new car when you drive it off the lot. So how else can you get furniture?

Easy – Craiglist!

Take a look on craigslist to try to find a piece of furniture that fits your style. If you do a bit of research to make sure you’re buying quality furniture you could easily save hundreds or thousands off what the original owner paid at the furniture store.

Yes, it might have some scratches, but that’s just fine! You would have ended up scratching it anyway and now you don’t have to worry about it because someone else already scratched it for you. To top it off, you ended up saving money.

I want to know about your furniture adventures! Have you ever gotten a cash discount at the furniture store? Have you ever scored an amazing deal on craigslist or a yard sale? I’d love to hear about it in the comments below!

Image by: Plage Vinilos y Decoracion Text added by: Lance Cothern

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. Bryce @ Save and Conquer says:

    I’ve written about our eclectic collection of furniture in the past. We have dressers that are probably 40 years old mixed in with quite a bit of garage sale furniture. Our most recent furniture purchase was a master bedroom set that we bought 15 years ago. It still looks the same as it did when we bought it. I doubt we will be buying any new furniture anytime soon.

  2. Lance – nice insights on buying furniture with this post. Most of this I didn’t know. I never thought about the 0% marketing tactic used to just get you to buy the furniture.

    Are there any tactics that a consumer can use when buying new furniture from a furniture store to lower the price? or would you recommend just avoiding furniture stores all-together?

    • I would always ask for a discount, do some research online and be prepared to pay with cash if you want to buy from a store. Honestly, you’ll probably get the best deals buying used quality furniture not the cheap stuff from the stores.

  3. Crap! I bought all my furniture on this deal years ago! Oh, well :) Fortunately I know how to handle purchases like this and know well, well in advance when I need to have it paid off so that I never pay a lick of money in interest. Even though I agree with the warning, I should also state that our credit score has been fine.

  4. We won’t be buying any more furniture until our youngest turns 6. They have already torn up so much stuff so it’d be a complete waste to get anything nice. But we certainly planned to pay with cash, now I will know to ask for a discount. Thanks for the tip!

  5. Good stuff! Another reason not to take these furniture offers is that if you go past the 48 month 0% time period and still have a balance they charge you all of the interest back retroactively. That’s a huge finance charge all at once.

  6. Ben Franklin (pre death) says:

    When buying a new house, these deals are second to none. There’s nothing difficult about making a payment properly every month. If you’re taking on a new $2800 per month payment and you can’t handle making another $125 payment consistently, then you probably have a lot more to worry about than a few hundred dollars in back interest. It is much more preferable to be able to buy all the furniture for your new home in one place at the same time than having to coordinate buying a few dozen pieces of used furniture and decorative pieces separately from Craig’s list. Furthermore, I wouldn’t want my kid sitting on some stranger’s couch who could have used the couch in a dozen unscrupulous ways. All for what? To save $1000? Make your monthly payments properly, for god’s sake, and take the free loan to buy some good quality furniture that doesn’t have someone else’s history inside the fabric.

    • I think you missed the point I was trying to make.

      • Ben Franklin (pre death) says:

        Actually, I think I addressed each of your points in a single, succinct paragraph. Additionally, unless your only form of credit is the furniture loan (does this even go on the trade lines as revolving credit?) your utilization won’t be near 100%. And to add to the scenario I laid out in my first post, your credit is already hit pretty hard with a brand new mortgage what with a couple hard pulls and 100s of thousands of “new credit”. By the time your credit score recovers from the mortgage, your furniture loan has become another account that is paid as agreed and nearly paid off on your credit report. So it ends up helping your score by diversifying your report and having another account on file that’s paid as agreed. If you pay your bills properly, these deals are nothing short of great.

        If you can’t pay your bills properly, then steer clear of these deals.

        • Completely agree with you!
          we just bought a house a few months ago and all of our furniture is from Craigslist. I’m looking at buying a new bedroom set and a possibly a couch.
          if you can’t make payments on time then don’t buy nice things.

  7. I found this article very one sided. I own my home and my car and I always make my payments on time. Most banks offer automatic bill pay so you don’t even have to think about it. The issue I have with buying used furniture is you don’t know how the previous people used it. I’m not interested in potentially sitting in someone’s bodily fluids whether it be from vomit to remnants of sexual activities. Even shampooing furniture doesn’t guarantee removal of all this. I’ll take the couple points ding on my credit score for the new furniture.

  8. This article is common sense. Of course if you miss a payments, your credit score will take a hit. Of course if you don’t meet the terms of the financing, you know, like paying your bill, the interest rate will kick in. 0% financing is a no brainer if you have a lick of sense and fiscal responsibility.

    • 0% financing is a big trap to allow people to spend more than they have available today. If you can’t pay cash, you shouldn’t take 0% financing for a want. Also, if you could have negotiated a 10% discount rather than 0% financing, that could be better in most cases.

  9. I can certainly relate to the author’s perspective and would agree it’s good general advice, but it’s been my experience that a lot of decisions like this are made with very little research by the individual in relation to their own personal experience.

    Example, while I agree with the author’s general advice, I do in fact have a Nebraska Furniture Mart card with 0% interest that I use; however with perhaps a different approach.

    I ONLY buy furniture from NFM’s clearance section and I ALWAYS ask for money off the already discounted/clearance price regardless of how I pay. I don’t even discuss how I am going to pay. Additionally, I work with only one salesman that I like and who specializes in the Clearance department. I have created a “wish list” that he has and he knows what I expect to pay for an item compared to it’s original price. (and I only buy high end items. I could never do so at full price, but I have had great luck this way)

    Another thing to realize is that clearance dept. don’t want this stuff sitting around. If they mark it 1/2 off and it doesn’t sell in a week or two then it gets marked down again, wash-rinse-repeat until it sells. So, in this case timing is everything. You have to wait until it’s cheap enough for a mind blowing deal, but you have to get to that deal before someone else does! This is why I will use the 0% financing. If I want to purchase an item that exceeds my savings because the price is right, but I will not have all the cash for between 1 – 4 paychecks I will go ahead and buy the item and finance it to get that price and then diligently pay it off quickly (in the 0% time frame)

    So, because of the situation/relationship I’ve created with my seller and the fact that I can pay off something I finance within a short set of months (4 months is really the longest I’ve gone so far, but I would do up to 6 or 8 months) I have been able to jump on crazy good deals even when my bank account comes up a bit short. Typically I would do this only for larger purchases (entire bedroom set, etc) not just a couch…

    SO, how good a deal do I get? Well, first you should know that NFM posts 2 prices on everything. The “retail” price is made up my magic unicorns in fairyland and have zero to do with reality in the vast majority of cases. Then there is the price on the bottom right of the back of the sales tag (in the clearance dept at least). This was the “real” price of the item as it would have been sold on the showroom floor. So, its that second number we are trying to whittle down; I don’t give a darn about the other number. Typically items show up on the clearance floor for around 50% of the first/nonsense number and go down from there. You can shoot them a price or you can ask for a % off the current price. I typically just shoot them a price and I shoot below what I will pay, but then I like dickering! :-) As well, percentages can be deceiving. 50% of $5,000 is A LOT, but 50% of $100 is still good, but MEH, not writing home about it… If I then cannot get the deal I want I ask my salesperson to watch it for me and give him a “buy now” price to shoot for. If the item gets that low I buy it, if it does not then some other sucker can pay too much for it and more power to them! LOL

    SO, here’s an example from the last month of something I bought this way. There were two clearance curios I wanted. The “Real” retail price is around $2,300 each and they are clearance sale priced online for around $1,700 and (there can be different clearance prices online and in person too!) and these two hit the clearance floor at my store for $999 each. I have been watching them for a while now and they kept going down. First $700 then $600. Today I got a call from my sales guy and they just got marked down to $350 each! I asked for another $100 off to buy both and got $60 more off. So, if I bought these off the showroom floor brand spanking new they would have been $4,600 for the pair and they would have been very happy to sell them to me. Instead I kept my eyes open, accepted that I might not ever get them and waited and ended up paying $640 for BOTH of them plus tax!

    Not every single deal is this dramatic, but for me most have been. I did recently buy a $2,000+ custom ordered high end table that the customer refused so it went to clearance for $560, but I REALLY loved the table and stand by that purchase! LOL The chairs are from a different custom order gone wrong and they were freakin’ $1,500 EACH new!?!?!? Who pays this for dinner table chairs?!?! I got them for $260 each, so really proud of that purchase and it takes some of the sting out of only getting 75% off the table!

    So, my opinion is that like most things you get out of a situation what you invest. I think 0% financing can be a great tool, but so is fire… you just have to know how to not get burned..

    My dos centavos

    • Sounds like you have put a lot of thought into it, but if you can’t pay $500 out of your checking or savings account then the person is probably living beyond their means and probably hasn’t saved much for retirement either. Using 0% financing to buy something you can’t afford today is generally accepted as living beyond your means.

  10. Interesting read. I think if you cannot afford it, then don’t buy it. However, I am not opposed to leveraging credit. I have purchased furniture before using 0% financing and it was fine. We bought $500 worth of furniture and paid it off in 3 months (had 12 months). We had money in the bank, but didn’t want to part with the cash right away. We didn’t pay any interest and we couldn’t “negotiate” a lower price by paying cash (large chain store).


  1. […] Financing Furniture At 0% Is For Suckers- Since home decorating is the theme of the day, Lance from has some good advice on buying furniture.  Regular ABC readers will know that craigslist is my furniture store of choice. […]

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