How to finance a large electronic or appliance purchase

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It’s likely that you’ll need to purchase a large electronic device or appliance at some point — whether that’s a bigger television, washer and dryer for your new home or a new refrigerator. The holidays are coming up — and that means that electronics and appliance purchases are much more common, and holiday shopping deals can be found at just about every store.

Purchasing these types of appliances can be extremely costly but there are ways to finance these items to reduce the financial strain on your wallet.

Types of electronics and appliances available for financing

Large electronics costs can vary widely — for example, they can be anywhere between $350 and $8,000.

Here’s a list of the most commonly-bought large electronic purchases that consumers tend to purchase and the expected cost of each.

What are my financing options?

Large electronic purchases can be costly, but fortunately, there are lots of ways to finance a large electronic purchase. You can use a rewards credit cards, store credit cards, loans from credit unions or banks, in-store financing and more. Here’s a breakdown of all the ways you can finance large electronics.

Credit cards

Using a rewards card with zero percent interest rate is great alternative for a large purchases, especially those that offer an electronics cash back category. Some cards allow you to earn up to 5% cash back on electronic purchases.

Store credit cards like Best Buy, Walmart, and Staples can also offer some excellent perks and a way to build your credit. Store credit cards reward you with their loyalty and offer discounts on purchases, free shipping, extended returns, and birthday gifts, according to U.S. News and World Report.

The downside to in-store credit cards is the interest rates involved. Check the annual percentage rate (APR) for each card — these tend to be fairly high. An in-store card will also offer limited use — for only one store or a group of stores.

Credit unions and banks

Banks and credit unions that offer personal loans could be an option if your credit isn’t good enough to qualify for a rewards card. Personal loans aren’t backed by collateral, which means you don’t have to offer your lender something in exchange if you don’t make your payments or default on your loan. For example, a car loan involves collateral — your car. A home loan requires you to offer your house up for collateral. That’s the benefit to a personal loan — there’s no collateral involved. Plus, you can use your personal loan for anything you want — including a large electronic purchase.

The downside? A personal loan interest rate could be higher compared to other interest rates you might find, though not as high as a credit card.

In-store financing

Some stores have financing options or payment plans that allow you to make smaller payments toward the total cost of your purchase. In other words, you can apply for credit at the store where you’re purchasing your large electronic purchase. It’s a good idea to pay for your item on time each month or the interest rate could go up.

Rent-to-own companies

A rent-to-own company allows you to take electronics home and pay installments on those items. You can return the items to the rent-to-own company without penalty, but if you neglect to make your payments, the rent-to-own company can repossess your items.

You’ll pay more than the original price of any item you’ll get at an item from a rent-to-own company. For example, you could pay twice the standard retail price for appliances or electronics from a rent-to-own company like Aaron’s or Rent-A-Center.

Peer-to-peer lending

You can borrow from individual lenders instead of banks with peer-to-peer lending. They usually have lower rates, are typically unsecured personal loans and it’s usually quick and easy to get funded. Another perk of peer-to-peer lending is that it’s possible to get approved even if you have a lower credit score. Be sure to do your research and read reviews before you apply so you don’t fall prey to scams.

Online Lenders

Online lenders can be riskier but they’re also convenient — you can usually get a loan quickly. But be sure you’re covered by a reputable bank, credit union or another online lender.

Be sure you’re not opting for a predatory payday loan — payday loans charge exorbitant interest rates. Credible lenders will not charge annual percentage rates much higher than 36 percent, whereas a payday loan could charge over 300 percent or more.

Important things to consider when purchasing large electronics or appliances

There are a few important things to consider when you purchase large electronics, and seasonality is a huge consideration. There are peak and off-peak seasons for specific purchases. It may be better to plan ahead for things like Black Friday deals — but keep in mind that you aren’t out of luck if your stove breaks down in August. You can still find deals year-round.

Pay with a credit card when you make your large electronic purchase — federal laws will protect you if you need to dispute your charges. You won’t have the same protection if you pay with cash or any other type of payment method, according to

Warranties and returns

Warranties are also an added expense if you choose to add them. Extended warranties are rarely beneficial for customers — but they are for stores, according to the Washington Post. You likely won’t have issues during the extended warranty period and the repair cost is usually less than the extended warranty cost.

Also, check the return and refund policy on any large electronics purchase you make. There may be a specific number of days you have to return or exchange the item. Find out if return shipping is free for online purchases — and make sure the merchant won’t only give you store credit toward other purchases.

Find out if a merchant charges a restocking fee for returns. This is a percentage of the purchase price for returns — it could be a 15 percent fee on electronics like opened projectors, GPS equipment and some charge a 25 percent restocking fee on appliances, unless the item is defective.

Information needed for financing

You’ll need to provide some information to a lender, depending on the type of loan you apply for. Let’s say you get a personal loan to finance your electronic purchase. You may need to supply:

  • A loan application: Every lender will have its own specific application.
  • Proof of identity: You might need to offer up a couple of forms of identification, which could include a driver’s license, passport, state-issued ID, certificate of citizenship, birth certificate or military ID
  • Employer and income verification: Personal loans are unsecured loans and will require some sort of employment or income verification, which could include pay stubs, tax returns, W2s or 1099s, bank statements or more. Check with your lender for more information.
  • Proof of address: You might need to prove your address with utility bills, lease or rental agreement or voter registration card.

Keep in mind that in order to get a loan or other type of financing, you could endure a hard credit inquiry — this can lower your credit score.

Donating old devices

You can usually deduct the fair market value for donated appliances if they’re in good used condition, according to the IRS. Here are a couple of pointers:

  • Donate to an IRS-approved charity using the tax-exempt organization search.
  • Consider the item’s age and quality when estimating its amount. Again, consider its fair market value.
  • Keep the receipts from the donation in case you’re audited.

Product lifespan

Determine how long your large electronics purchase will last. For example, let’s say you finance a computer that bites the dust after only three years — and you finish paying it off after two years. You’ll only enjoy it for a year before you’d have to turn around and purchase another one — and you’ll be out the interest you paid on the item. In this situation, it might be a better idea to save up for the cost of the item and put the purchase on hold.

Bottom line

What should you do if you need to finance a large electronics purchase — at any given time of the year? First, it might depend on the types of deals that are going on. Check online, look at ads, check with the store directly.

Next, determine which type of financing works best for you, whether it’s cash, in-store credit cards, a personal loan, or rent-to-own. One option might appeal to you over another. Just do your homework carefully so you’re not surprised by interest rates — or more.