IKEA is offering a brand new financing option closer in style to popular buy now, pay later schemes.
The new payment option lets shoppers spread the price of buying new furniture without having to pay interest.
Ikea has simplified its financing options and also the new loan can be used as lower amounts and repaid on the shorter period of time.
The Swedish furniture giant now offers one choice for in-store and online: an interest-free loan on purchases starting from lb99.
Money could be paid back between three months and four years, and also the exact period will depend on just how much you borrow.
Shoppers can apply online, either via the Ikea website or by downloading the Ikea Finance app, along with a decision is instant unless more checks are needed.
Ikea previously offered a variety of options for spreading the cost of purchases, together with a loan with interest and interest-free credit in shops.
The minimum period for paying the money-back was Twelve months and also you needed to spend a minimum of lb300.
The shake up brings it closer to buy now, pay later schemes, which let shoppers spread repayments for smaller purchases over shorter periods and usually with zero interest.
The new option is a loan and includes credit report checks, whereas buy now, pay later providers don't do this.
The loan can also still be used to spread payments on larger amounts up to lb15,000, and over a longer time if needed.
Most buy now, pay later providers allow you to spread the price over months instead of years, and for purchases worth lb100s instead of lb1,000s.
Ikea said the brand new finance option will "make applying for financial support more accessible and convenient for all customers".
Compare your borrowing options
There may be better choices for borrowing and experts propose that shoppers check before they're buying so they get the best deal.
Rachel Springall, a finance expert at Moneyfacts, said: “Consumers with virtually no disposable income and therefore are unable to purchase goods upfront risk turning towards the ease of a finance option, but it's important they consider other forms of borrowing too."
Credit cards offer zero interest and more flexible repayment options, she said, and there will also be loans using their company providers which could work out better.
Ms Springall said: "Credit cards might be attractive choice, as although consumers adjust their monthly repayments, but they might get a 0% purchase card for approximately 21 months interest-free with Lloyds Bank.
"Or they might move their borrowing with an existing charge card to some 0% balance transfer card to spread the price for approximately 29 months with a fee of 2.69% with MBNA Limited.
"Those consumers who wish to consolidate debts and need a set repayment plan may decide to consider an unsecured personal bank loan where rates can be as little as 2.8%."
But she warned that borrowing money via an overdraft was unlikely to be a better option, as rates can be high.
She said: "One form of borrowing to avoid is using an overdraft, unless they have an ability to pay the debt off soon, it may be rather expensive as some overdrafts charge nearly 40% APR.”
How does Ikea's new financing option work?
You can take out a loan for purchases between lb99 and lb15,000 and also the repayments can be spread with time – between 3, 10, 24, 36, 48 months.
Your options will depend on just how much you borrow.
You won't pay any interest and you may apply for the borrowed funds when shopping in store or online and when buying any Ikea products, except food.
The loan can include the cost of delivery and kitchen installation too.
To be eligible, you need to be over 18, have valid photo ID (a full driving licence or passport).
You'll have to provide your house address within the last 2 yrs and employment status.
You can use online or using the IKEA Finance app and you will have to take advantage of the borrowed funds within 90 days of applying.
A decision is instant, unless the application needs more checks after which you'll be contacted within three business days.
There's a “soft” credit search to determine eligibility before a full application, and this won't affect your credit rating.
But a complete credit assessment is performed after submitting your application and will also be flagged when you go onto this point along the way.
There's a lb12 fee for any missed payment and anyone struggling to maintain repayments should contact Ikano Bank, where their customer support can help .
What finance did Ikea offer before?
Previously, Ikea offered interest-free credit of 12, 24 or 36 months on purchases of over lb600, or over lb250 in some stores for a limited time as a special offer. It was only available in stores.
It also offered loans with repayments spread across 12, 24, 36, 48 or 5 years, starting from lb300, however this included mortgage loan of seven.9%. Again, this was only in shops.
Ikea also offered the option to pay with Paypal credit for online shopping. This offered interest-free credit over four months on purchases of more than lb99.
Anyone who has used these old financing options and is still repaying it will continue to settle the money a normal and also the the borrowing haven't changed.
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