Read On To Know The Best Financing Advice You Can Give Your Customer In The Furniture Industry

In today’s modern world, purchasing furniture not just gives a boost to one’s lifestyle, but it also improves the quality of time that you spend at home. For most people, this is among the top priorities of life. Depending on the amount of money one is ready to shell, furniture comes in all budgets.

As evident as it is while buying furniture, the design, and quality of the product will depend on the budget. This might make one believe that by spending more money, they will end with a better product and one should keep aside as much money as possible for furniture purchase. However, purchasing any piece of furniture is like opting for a car; its value depreciates from the moment of purchase.

Thus, it can be established that there is no one-fit model for furniture purchase. What works best for an individual may not be suitable for others. That is why evaluating the different options for financing furniture is essential before making a purchase.

This article throws light on how furniture business owners can use their financial knowledge to guide the customers through furniture purchase.

Avoid Layaway

Many furniture stores offer the option of layaways.  Here the customer books furniture of their choice by making an initial deposit. While some stores have a pre-defined amount for the initial deposit, most places allow you to pay an amount of your choice.

The customer then makes payment at pre-decided intervals (weekly, every fortnight, or once a month). Once the total amount is paid for, the customer takes home the furniture. The fact that one pays the furniture’s actual price in total (and not any additional interest is what makes it a lucrative option among people).

However, this is not a smart financial decision, and if you want to offer financing to customers, you must let them know of its disadvantages.

Firstly, imagine incurring some unexpected expenses in a particular month that doesn’t allow you to pay your monthly installment. Most furniture stores will not be considerate towards your situation, and you may lose out on the deal that you had settled for.

Moreover, in the case of smaller stores, the furniture you had paid for may be damaged or lost while it is with the seller. Most of the time, you will be offered store credit. While it is relieving to know that your money isn’t gone, you do not get the product you wanted, and neither do you have the luxury of looking for it at some other store.

Pay by Cash

When you realize that the customer you are assisting has the money in hand, you should guide them to the fact that the best way of making a furniture purchase is by paying cash.

Here, the buyer does not need to pay any additional interest. Considering that furniture is a depreciating asset, it does not make sense to pay for something whose value decreases with usage.

Moreover, by making the payment in cash, your customers can ensure that no one can take it away from them (on account of non-payment of installments).

The luxury of painting and modifying the furniture to one’s taste is something that comes with buying it in cash. The fear of furniture reposition often prevents credit card purchasers or those who have used a loan from making the most of the furniture.

Moreover, purchasing in cash does not cause your customers to acquire any debt. That way, there is no worry about debt bogging down a person’s financial future. Encourage your customer to purchase in cash, as that way they can afford to stop worrying about the financial aspect of the furniture immediately after its purchase.

Utilizing Home Improvement Loans

Not many people are aware of the fact that home equity loans allow one to take a loan against their house as collateral. Considering the amount of money that one might need to purchase a home is considerably higher than the amount necessary for the furniture, opting for a loan like this is a great way to buy expensive furniture.

Most lenders offer appliance/furniture loans up to $5000, which are relatively easy to obtain. If your customer’s furniture budget is more than this, you can always guide them through traditional equity loans.

In either case, taking a loan allows the luxury of more expensive and high-quality furniture. This furniture lasts longer than their cheaper variants, thereby saving your customers a considerable amount of money in the long run.

Retailer Financed Furniture Purchase

If a customer approaches you stating they want to purchase a piece of furniture but do not have the cash handy for the same, you can guide them to retailers offering financial aids.

Top furniture retail brands have tie-ups with lenders and provide interest-free loans for purchases for the first year. This means that if an individual closes the payment within a year of purchase, they will be paying 0% interest.

However, if a payment is missed, the interest rate will soar to 20% (or higher) in an instant. Moreover, as retailer loans are often retrospective, the customer may have to make back-payments for previous months’ interest if they miss a payment.

Thus, while retailer payments are an efficient way of purchasing expensive furniture, advise this only if you are sure that the customer in question will be able to pay every installment on time.

Conclusion

For people unsure of how to offer furniture consumer financing, the first step is to realize that the most suitable type of financing will depend on one’s current financial state. Understand your customer’s existing debt and spending habits to have a picture of how likely they are to make timely repayments.

Having an understanding of whether your customer is looking for some cheaper, short-term purchases or more expensive furniture is also essential. All these parameters will be of help when you settle for finding out the best financial scheme for your customers. It is your industry experience and a gut feeling that will be the ultimate deciding factor.