Paying cash upfront is the safest and most affordable way to finance carpeting and hardwood flooring projects. But, who has that type of money lying around – especially new home buyers?
Homeowners can turn to two sources of capital with unique pros and cons.
Taking out a loan places money in your checking account and puts you in control of choosing the contractor with the best price, service, and reputation.
Financing through the flooring company allows for one-stop-shopping and special promotional offers but limits your choices. Plus, a third-party bank is pulling levers behind a curtain.
Online Loans for Flooring Projects
Financing through online lenders gives you the flexibility to compare flooring companies. Having loan proceeds deposited directly into your checking account allows you to choose the retailer offering the best price and service for your rugs, hardwood, tile, stone, vinyl, or laminate surface project.
Pick the loan alternative that matches your credit profile and mortgage status.
Request a personal loan here (Sponsored Link) to fund your carpet or hardwood-flooring project if you do not have enough equity in your real estate property. Choose home improvement in the online form as the reason you need the money. Have your checkbook handy to input the bank account and routing number so the lender can deposit funds quickly – if approved.
Personal loans are unsecured. Unsecured means that you do not need to pledge the equity in your home as collateral. Unsecured contracts work well for new homeowners that have yet to pay down their mortgage. Also, the lender cannot force foreclosure if you default.
Home improvement loans secured by the equity in your real estate property are the more affordable way to fund a carpeting or flooring project. However, this alternative is viable only when the loan-to-value (LTV) ratio on your mortgage is below 80% – although the LTV rules for each online lender vary.
Loans secured by the equity in your home are more affordable because the interest rates are often lower, the interest may be tax-deductible, and longer repayment terms equal smaller monthly payments.
Choose between three versions.
- Cash-out mortgage refinancing
- Home equity loan
- Home equity line of credit (HELOC)
However, using the equity in your home has a dark side. The lender can place a lien against the property or foreclose on the mortgage if you fall too far behind on payments. Having brand-new carpets is of no value if the mortgage company forces you to leave your residence.
Financing flooring or carpeting with bad credit (FICO score below 670) requires extra steps and the ability to read the fine print before signing in the dotted line. Please do not put your living space at risk by taking out a secured loan for new rugs, tiles, or parquet surfaces – your chances of default and foreclosure are much higher than average.
Unsecured contracts have tamer consequences should you fall behind – if you can qualify. Keep these considerations in mind.
- Online companies approve a higher percentage of consumers with poor credit scores below 670. Traditional brick and mortar lenders target people with better credentials. Why waste your time and hurt your rating further with hard inquiries?
- Online lead consolidation outfits (such as the affiliate partner on this site) gather consumer-borrowing profiles and market them to an extensive network of lenders. Volume increases your approval odds.
- Bad credit lenders often require an auto-debit from a checking account to ensure prompt payment. Also, expect higher borrowing costs in the form of origination fees, interest rates, and insurance premiums.
No Credit Check
Financing flooring and carpet projects without a credit check is another way to find a willing lender when your borrowing credentials are weak. Pledging your house as collateral without a lender pulling your consumer report is not a good idea, but taking out an unsecured loan in this manner is feasible.
No credit check lenders operate differently from what people expect.
- Current income and affordability is more important than past payment history, which could be negative
- They utilize alternative reports from second-tier bureaus that supply non-traditional payment data from apartment complexes, utility providers, and phone companies
- They log hard inquiries on the file of the company providing the report, but not at Equifax, Experian, or TransUnion
- They use ratings based on the non-traditional data sourced from alternate bureaus, but do not consider mainstream FICO or Vantage scores
Flooring Companies That Offer Financing
Sometimes flooring companies advertise that they offer financing to help customers update their carpet, hardwood, tile, stone, vinyl, or laminate living surfaces. This type of arrangement may be convenient, but it limits your choices, and work differently than you might think.
Local dealers and installers rarely issue credit themselves. Instead, they outsource the function to a third-party bank in a private label arrangement. A private label means the lender uses the retailer brand.
In other words, you must work with the bank that the flooring company chooses. You may not meet the qualifications, or get the most favorable terms from this one lender.
The Lowes Advantage Card is a private label financing arrangement backed by Synchrony Bank. Customers can borrow money from their accounts to fund carpeting projects as well as many other home improvement items such as above ground pools, hot tubs, repair supplies, windows and siding, and more.
The Lowes Advantage Card supports two types of promotions.
- Additional 5% discount on qualifying purchases charged to the account
- Zero percent interest on transactions above $299 if paid in six months
Once again, deferred interest pertains to the second offer. Make sure to pay the full balance or suffer a 26.99% charge on the total balance applied from the purchase date.
Home Depot offers two types of financing programs that consumers can use to fund carpeting and other jobs such as kitchen, basement, bathroom, and HVAC upgrades. As with other retailers, a third-party company manages these private label programs.
- Citibank Retail Services issues the Home Depot credit card designed for smaller needs. The card permits customers up to six months to repay purchases of $299 or more at an interest rate ranging from 17.99% – 26.99% based on eligibility.
- GreenSky Credit backs the Home Depot project loan to fund ventures costing up to $55,000. Customers have up to 84 months to repay the loan at a low 7.99% interest rate – if qualified.
The Floor and Décor credit card is an example of a third-party private label arrangement with Comenity Capital Bank. Qualifying customers can choose between two standing promotional offers that utilize “deferred interest.”
- No interest if paid in full within 12, 18, or 24 months
- 99% interest if paid in full within 48 months
Read about “deferred interest” in the Floor and Décor (and other companies with similar promotional offers) website by following the asterisks. For example, be prepared to pay a whopping 29.99% interest calculated from the date of purchase if you fail to pay the balance in full by the end of the promotional period.
Roses Flooring and Furniture offers three financing programs designed for consumers with inadequate borrowing credentials.
- The Roses-managed layaway plan allows customers to make installments ranging from 2 to 12 months. You can receive your merchandize only after completing all scheduled payments – not before.
- The Kornerstone Credit is a rent to own or lease agreement with a 90-day purchase option that is higher than the list price.
- The American First Finance offer is another rent to own contract allowing for higher amounts and longer terms.
The Shaw Flooring credit card is a private label product issued and managed by Wells Fargo bank. Customers have the advantage of making purchases at Shaw without tying up other revolving accounts.
The APR for purchases on newly opened accounts is a mammoth 28.99%. Therefore, shop around for other offers before completing an application for this costly option.
The Empire Today Carpet and Flooring Company also offers to finance through a Wells Fargo private label credit card. Customers can choose between two promotional offers that work well for people who pay the balance in full by the designated time.
- No interest if paid in full within 12 months
- 48 monthly payments with a special rate of 9.99% APR
Keep in mind that if you fail to retire the Empire Today balance in full, the bank will impose deferred interest at the rate of 28.99%. Budget accordingly to avoid these high charges.