Can I Use a Personal Loan to Pay for Major Appliances?
Just a few months ago, I had what was likely the worst two weeks of my life when it comes to appliances. One minute, we are going along in life and everything seems ok. The next, my oven suddenly stopped working. This was terrible for me for a couple of reasons:
1.) I love to cook and bake, and
2.) with 6 mouths to feed, I have to cook to save money.
Needless to say, the lack of oven threw me for a loop. Personal loan for appliances comes to mind. But wait…
As if that was not enough, two days later my hot water heater stopped working. The following week, my dryer stopped and my main air conditioner went out. It was insane in my home. And while I could normally think through things enough to figure out how to replace something, I had four major appliances to replace at one time.
Have I figured it out?
Burning hot and overwhelmed, I honestly had no idea what to do. I was not even sure where to begin. All of these appliances played a huge role in my home, but I did not have the money to replace any of them. What does one do when appliances break down with no warning? I wish I could tell you I have it all figured out now, but that is not true. What I do have is some progress and a plan, as well as some other ideas to share with you. I hope you are not facing the need to replace multiple appliances like me, but whether you need one major appliance or ten, these steps and ideas can help.
Assess the Situation with as Much Honesty and Clarity as Can Be Found
After the shock, the overwhelm, and the well deserved pity party stopped, I gave myself a pep talk. It went somewhere along the lines of, “Put your big girl pants on and get to work. No one is going to just hand you what you need. Figure it out.” From there, I went to my white board and started really analyzing my situation. I asked and answered the following questions:
Are all of these major appliances necessary for survival?
Let’s be honest, none of them really were as people have lived without them all before. We have become conditioned to believe these items are necessities because they are the norm. So first, I let myself breathe a little. However, I happen to like all of these non-essential luxuries. I like hot showers. Also, I like to pull my clothes out of the dryer smelling like my favorite fabric softener. I love to cook, and I really hate to sweat in my own home. No, they are not necessities, but I want them back, which leads to the next question.
Is there a tolerable and affordable alternative to any of them at the moment?
As much as I love my freshly dried clothes, there is really no reason I cannot hang clothes to dry for the moment. For that matter, there are about 20 laundromats in my area if I just really want to dry them for now. And since the stove eyes still worked, I was not totally without being able to cook, and a toaster oven lets me bake a few things. As a nice surprise, my sister gave me a rotisserie machine that she was getting rid of, which was really awesome since she did not even know my oven was not working. Between my toaster oven, rotisserie, and stove eyes, I can still cook a good meal.
As far as the air goes, it is definitely a priority in this Alabama heat. The inside of my home stays hot enough that I probably do not really need an oven, so we had to get the air conditioner working. And the hot water. It may be hot but I still do not want an icy shower. After I determined that these were the top two priorities, I moved on to calculating the costs of each and planning the purchases. Since I still did not have enough in savings to replace these two appliances, I had to consider other means, and that included a personal loan for major appliances.
Reasons People Get a Personal Loan for Major Appliances
Since personal loans can be used for pretty much anything, it is not odd to consider on for major appliances. The problem is that most people jump into a personal loan for major appliances without thinking it through or really needing one. Quite often, this is either because they are desperate or, like I mentioned earlier, are convinced that the appliance is a necessity right at that moment.But of course, there are times when there are good reasons for using personal loans.
As you can see from my story, necessity is relative to the individual’s or family’s opinion. If you deem an appliance as immediately necessary, no one should try to convince you otherwise as priorities are different in every home. If you choose to get a personal loan for major appliances, you will be in good company as many others do the same. Make sure you assess the situation and find your reasons for getting a personal loan.
To Get a Loan or Not to Get a Loan…
Getting a personal loan for major appliances is a completely personal choice- along with your spouse or significant other, of course. The key is really to just think it through. Jumping into any kind of debt without careful consideration is not a good idea. Also, some things are not worth financing. When making the decision, you should really consider your current budget. Can you afford an extra payment every month? Many people’s budgets are stretched to the max already. Adding in another payment would cause some severe problems. This does not necessarily mean you should give up. There are advantages to getting a personal loan. That loan just might help you in more ways than one if you make wise moves.
Things to consider
For instance, if your budget is stretched due to other debts that you are currently repaying, you might consider getting a loan that would consolidate those debts and pay for your appliances. This type of move could let you breathe while making lower payments with lower interest. As I said, you need to be wise with this, so before you make this move, be sure that the interest rates of the personal loan and the payments for the loan are lower than what you are paying now. Otherwise, you will continue your debt cycle.
Pros and Cons of a Personal Loan for Major Appliances
As with all things in life, there are pros and cons to getting a personal loan for major appliances. On the positive side, you can replace your major appliance very quickly. Instead of paying it all up front, you get to spread the cost of the appliance over a number of months or years, depending on the specified repayment terms. The interest rates of a personal loan for major appliances are generally much lower than credit cards and other options, so you save some cash. On top of all of those benefits, if you make your payments as you should, you will improve your credit.
The downside to a personal loan for major appliances is simply having a debt you have to repay. Debt interferes with budgets and usually puts financial goals on hold. And, even with low interest rates, you are still paying interest, and possibly fees. Also, if you do not pay your payments as you should, you will mess your credit up- something nobody needs. Repaying debt can be a real struggle.
Alternatives to a Personal Loan for Major Appliances
Before running to your local lender, take a step back and consider these alternatives to getting a personal loan for major appliances:
-Family and Friends
I know not everyone has family or friends that can or will help them out, but it never hurts to ask. Maybe they cannot front you the cash, but they just might be getting rid of what you need. They also might know someone who is selling what you need for cheap. No, they will not be brand new, but if they work, you can utilize them until you can save the money.
Credit cards can be used for major appliances, if you have enough available credit, but it might not be the best choice. Some credit cards charge higher interest rates than lenders do, and the interest compounds every month. On the other hand, if you are in an introductory 0% interest phase, the credit card would be your best bet provided you pay off the appliances before the introductory phase is over.
-Work for It
Of course, you can always work to pay for your major appliances. Pick up some extra shifts or a second job. Here is another secret for you: if you can find a job waiting tables somewhere, you can make it pretty quick. If you go to a restaurant that keeps a really steady stream of customers and take good care of your tables, you can make hundreds over one weekend. It is not a job you want to do forever because it is a stressful job and can break your body down if you are not careful.
However, picking up a couple of shifts on the weekends for a while can help you reach a lot of your financial goals quickly. When I went through my appliance meltdown a few months ago, I was tempted to go back to serving myself. I knew from experience that I could have the cash in my hand to pay for all four appliances in three weeks or less. As my health is one of my top priorities, though, I opted to focus my attention in other areas.
-Thrift Stores/Second Hand Stores
If you did not know, here’s a secret for you: thrift stores and second-hand stores are awesome. You can find all kinds of affordable goodies in them. Of course, you want to clean them up when you get home, but if they work, cleaning is a small price to pay for an affordable appliance. With the money you save, you can pay a teenager or college student $20 to clean it for you if you want.
Do not just look at thrift stores, though. Ask around for little family-owned businesses in your area. We have one close by that fixes up old appliances and resells them for affordable prices. Sometimes, if they have the space for it, they will take your old one to fix and resell while giving you a discount on your new ones. Check around for similar stores in your neighborhood.
Where to Get a Personal Loan for Major Appliances
You have a lot of loan places you can utilize to find a personal loan for major appliances, other than traveling all over your city. The following are some of the categories:
-Online Loan Places
Applying for fast loans online is extremely simple and convenient- and totally free since you do not have to spend gas money. You can find online loan places to help you with your situation. There are lenders online for all credit types and all borrower situations, though some may require some collateral from you if your credit history is unsatisfactory. One of my favorite parts of doing anything online is that I can do it at anytime: while I am sitting at my kids’ dentist appointments, while I am finally getting to catch up on the latest episodes of The Blacklist and Hawaii Five- O, or when I have been working all day and finally have a moment at 3 a.m. The accessibility and convenience are two great reasons you should consider applying online.
-Retailer Financing and Store Credit Cards
Another great place to find a consumer loan is through the retailer themselves. Major retailers are often connected with lenders that can help get you the items you need. Like credit cards, you have to pay attention to the terms and interest rates here. At times, retailer financing can be your best bet because they run specials that offer 0% interest for certain time periods, even up to five years.
Here is the secret though: those lenders offer that promotion to get you to borrow, and you will get that time period without interest. However, they feel comfortable offering such long period interest-free because most consumers do not pay the financing off in that time period. If you take advantage of an offer like this, pay more than the required payment each month so that you can pay it off during the promotional period.
Additionally, many large retailers have store credit cards. When you find the appliance you want, look around for a retailer that has financing available. Compare the interest and terms to that of your credit card and a personal loan for major appliances to choose the best avenue of financing.
-Banks and Community Credit Unions
Banks and credit unions are always an option, but banks tend to have more stringent requirements for loans. Try your local credit union as they are dedicated to helping their community as much as possible. One way they do this is by lowering the requirements of loans, so they are an option for more people. You might find that you can get a good loan with great terms from your community credit union.
Choosing Personal Loans from Online Lenders vs. Bankshttps://t.co/07TRGS9WWE
— Loanry.com | Loan Shop 🏪 (@LoanryStore) August 6, 2019
Where to Avoid Getting New Appliances
What I am about to say is probably the most heartfelt thing I can tell you. For no reason whatsoever should you step close to rent-to-own places. Absolutely avoid them at all costs as they are no better than title loans and payday loans when it comes to a debt cycle. I learned my lesson the hard way. I was a young clueless nineteen-year-old. Since I was waiting tables and had few responsibilities, I had money to burn.
Not all recommendations are great
One day at work, I mentioned wanting to get decent furniture for my apartment. A coworker suggested I go to the rent-to-own shop that she was getting her TV from. Talk about the blind leading the blind…and like the naïve teenager I was, I went straight there after work. I was elated to learn that I could afford a living room suit, bedroom suit, and a computer without hurting my wallet.
Since my coworker had already explained the process, I really did not listen to the salesperson explain it. I was imagining how awesome everything would look in my apartment. I made my payments faithfully and thoroughly enjoyed my new furniture, until about a year later. When I had gotten the furniture, after the excitement calmed down, I had calculated that if I made every payment on time, I would have everything paid off by a certain date.
The plot twist
As that date was approaching, I started really looking at my payment receipts and saw that I still owed thousands. It was actually almost the amount I started out owing. And that was the day I learned all about how rent-to-own places make their money. The original amount they quote is already two to three times the price you can purchase it for. Then, they add that ridiculous interest. By the time you realize what is going on- like me- you have invested so much in the product that you do not want to send it back. It is a trap. I could not even be upset with my coworker either since she had no clue to start with either.
If you are in great need, however, you might consider renting from one for a couple of weeks. For instance, if I had no other way to cook after my oven quit and no money to buy a new one yet I had a good check coming in two or three weeks, I could have rented an oven until that check came. That is the one really good thing about rent-to-own. You are not locked in a contract so you can send something back when you need to.
Major appliances do play a major role in our lives. If you are extremely accustomed to having an appliance and it suddenly stops working, it can feel a lot like missing a part of yourself. You suddenly have to figure out how to live without it. That can be difficult when you have no alternatives available at the time. Even at your most desperate times, try not to make any rash decisions.
Getting a personal loan for major appliances now just to lose it for non-payment in a couple of weeks is not going to help you one bit. Same goes for any loan. Even if you want to get something else, like a loan for a computer, think carefully about the reasons for getting a personal loan.
Instead of acting out of emotion, think through your situation logically and analytically. If you must, ask yourself what advice you might give a friend if they were going through the same situation that you are. Quite often, people on the outside can see things that those on the inside cannot. So, looking at it from a different perspective might help you come to a better solution. However, if you absolutely must or choose to get a personal loan for major appliances, be wise about it by carefully considering the terms of the loan.
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Brandy Woodfolk is an educator, home business owner, project manager, and lifelong learner. After a less than stellar financial upbringing, Brandy dedicated her schooling and independent studies to financial literacy. She quickly became the go-to among family, friends, and acquaintances for everything finance. Her inner circle loves to joke that she is an expert at “budgeting to the penny”. Brandy dedicates a large portion of her time to teaching parents how to succeed financially without sacrificing time with their little ones. She also teaches classes to homeschooled teenagers about finances and other life skills they need to succeed as adults.
Brandy writes about smart money management and wealth building in simple and relatable ways so all who wish to can understand the world of finance.