Loans: Furniture vs Home & Auto

One may not be an expert yet on home and auto loans, but loans on furniture can be explored by a salesperson of any level of experience. Those who have furniture at home or have been in the moving business. Those who have worked at a furniture factory or have hung around with people in the upholstery business. Everyone from manufacturer to customer must have had a thought about furniture on loans. Many department stores in North America offer furniture loans just like home and auto loan. Some consider it an opportunity to buy furniture while others consider it an expense in the long run.

   Furniture just like auto has depreciation. Most of the used or reupholstered furniture is bought not based on “mileage” or manufacturing date. But, furniture is rather bought and sold based on condition. The fabric of the upholstered furniture or the leather condition of leather furniture could play a key role in value determination. Some leather sofa’s and chairs have no cuts while others might be torn from place to place. Some furniture has a bad odor while others have been maintained or used less frequently to develop any odor. Some furniture like reclining chairs or spring mattress has lost its functionality due to use or misuse while others retain the elasticity for a mattress or powered operation in terms of reclining chairs. The wood for framing furniture also depreciates over a period of time and this is another factor in depreciation expense. Not to mention, a part of the wood chipping off to leave any nails exposed. Some furniture develops bed bugs or other insects which makes this kind of furniture obsolete. Though there are many things that may go wrong with the furniture, the impulse of buying new furniture at high prices is underrated. Leather furniture among all is simply irresistible. The leather is a popular upholstery material whether synthetic or animal product. Furniture to auto seats, marine upholstery to leather products, leather promises durability, aesthetics, and comfort. Unlike other fabric, leather is waterproof, usually odor free and easily matches paint color is mostly residential and commercial locations. However, leather also has its loops. A cut on a leather car seat is easily visible and may depreciate the used auto value significantly. Leather furniture in a home with pets is probably a risk. Most pets like cats and dogs have sharp and strong claws as well as significantly strong biting force. They may damage leather furniture in an instant. Moreover, leather furniture just like any other fabric-based upholstery may be damaged while moving. All these factors contribute to furniture depreciation.

Despite furniture depreciation, many consumers have little or no cash to buy all their furniture. Many consumers in North America live pay cheque to pay cheque or on credit. Some are so deeply submerged under the water of debt, that a rescue from a coastguard is next to impossible, never mind building “Noah’s Arc”. Even though one lives in debt, he/she still may consider buying furniture or investing in furniture as part of real estate. Real estate especially homes sold with furniture in mint condition brings more value and resale price. Sometimes this value may escalate with the escalating real estate prices. Some leather furniture may be worth twice more than their original retail price when sold with real estate. In fact, the price of real estate is often negotiated with renovations and furniture. However, investment in furniture with credit balance could mean inviting debt counselors in the future especially if this is not an investment property. Furniture manufacturers, retailers or upholsterers may sell furniture on credit secured by banks or debt collection agencies. Unlike a direct write off method for noncollectable debt, companies use allowance for doubtful accounts. This allowance may be based on deteriorating consumer credit before payment date or late interest payments. Since most retailers charge high-interest rates on furniture which has principal due years from purchase, it is highly unlikely that all their consumers turn out to be perfect customers. The business on credit whether a loan or credit from a credit card may turn sour at any moment. Hence, with opportunities comes risks!

   Overall, furniture loans are opportunities that may or may not be financially sound for customers on credit. Extensive research, as well as debt counseling with accountants and likewise, may be able to solve this issue! Moreover, insurance also plays a key role in furniture business just like home and auto. Furniture whether flame retardant or not is often insured for fire insurance which covers property and contents. Ensuring antique furniture is also on the rise with rising auction values. Insurance alongside maintenance may turn risk into an opportunity for furniture investments.

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