Once in a while, homeowners find themselves in situations where they need financing on short notice. They may need it for a new water heater or to finance an AC. Some of the options available to consumers include an in-store card and bad credit financing. In this article, we’ll look at how the two compare.
Credit Rating
Store cards have a high requirement for your credit score. The advantage in the eyes of some consumers is that it prevents them from making impulsive purchases.
However, it can be quite limiting for homeowners who already have their hands full with other obligations. Raising the funds to finance AC, for example, maybe too demanding since it may compel you to start rebuilding your credit.
On the other hand, a lease to own program usually does not demand a credit review of the applicant. They have flexible terms, and you will often have early payment options. Consumers have the opportunity to start working on their credit as soon as their financing has been approved.
Credit Checks
Another problem with in-store cards is that they have to perform credit score checks. Not only does the process take a lot of your time, but it can also ruin your credit. That is because the store has to evaluate your credit rating.
Every check to your score will cut points on your credit. While the points seem small and are often insignificant, it can be a headache when you are trying to fulfill other financial obligations, such as paying your mortgage. It also means in the future, the interest rates could be high when you try to get financing from the same provider.
A lease-purchase to finance AC or furniture does not require such procedures. As a result, it takes a short time to get your furniture and appliance financing approved. You can proceed with your business or project without worrying about delays from the service provider.
Repayment and Rates
The customer financing option of in-store cards can appear to be a good deal because of the low-interest rates. However, defaulting on your payments will be costly. The cards have an average APR rate of 23%. The rates can fluctuate over time, and to make matters worse, the repayment period is long. The chances of defaulting are quite high.
Additional benefits you may get through lease-purchase financing, are usually not included with in-store cards. Benefits like warranties are, nevertheless, important to consumers who have made a significant commitment.
Your provider will also regularly send you messages for deals and promotions. Intermittent notifications are not only annoying, but they could also tempt you to buy products you don’t need. Over the term of the contract, you will have made several impulsive purchases you could regret.
In Conclusion
In-store credit cards are probably not the best option when you want to make purchases for appliances, finance AC and furniture. Furniture can be expensive, and the terms make the deal too costly in the long-term. Lease-purchase programs have proven to be a more viable option for consumers making significant commitments. You can find more information on appliance financing from the Okinus furniture website today.
