Ikea launches its own ‘buy now, pay later’ program
IKEA is offering a new finance option that’s closer to the popular buying style now, pay later.
The new payment option allows buyers to split the cost of purchasing new furniture without paying interest.
Ikea has simplified its financing options and the new loan can be used for smaller amounts and paid off over a shorter period.
The Swedish furniture giant is now offering an in-store and online option: an interest-free loan on purchases starting at Â£ 99.
The money can be repaid between three months and four years, and the exact period will depend on the amount you are borrowing.
Buyers can apply online, either through the Ikea website or by downloading the Ikea Finance app, and a decision is instant unless further verifications are required.
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Ikea previously offered a range of options for spreading the cost of purchases, including an interest-free loan and interest-free credit in stores.
The minimum repayment period was 12 months and you had to spend at least Â£ 300.
The overhaul brings it closer to buy now, pay later systems that allow buyers to spread refunds for small purchases over shorter and generally interest-free periods.
The new option is a loan and includes credit checks, whereas providers to buy now and pay later do not.
The loan can also be used to spread payments over larger amounts up to Â£ 15,000, and over a longer period if necessary.
Most buy now and pay later, vendors allow you to spread the cost over months rather than years, and for purchases worth Â£ 100 instead of Â£ 1000.
Ikea said the new financing option “will make applying for financial support more accessible and convenient for all customers.”
Compare your borrowing options
There may be better borrowing options, and experts advise buyers to check before they buy to get the best deal.
Rachel Springall, finance expert at Moneyfacts, said: âConsumers with little or no disposable income who are unable to pay for goods up front can turn to the convenience of a finance option, but it is important that they also consider other forms of borrowing.
Credit cards can offer zero interest and more flexible repayment options, she said, and there are also loans from other providers that might work better.
Ms Springall said: âA credit card can be an attractive choice because not only can consumers adjust their monthly repayments, they can also get a 0% acquisition card for up to 21 months without interest with Lloyds Bank.
âOr they could move their borrowing from an existing credit card to a 0% balance transfer card to spread the cost up to 29 months with a 2.69% fee with MBNA Limited.
“Consumers who wish to consolidate their debt and need a fixed repayment plan may wish to consider an unsecured personal loan where rates can be as low as 2.8%.”
But she warned that borrowing money over overdraft probably wouldn’t be a better option, as rates can be high.
She said: âOne form of borrowing to avoid is to use an overdraft, unless they are able to pay off the debt quickly this can be quite expensive as some overdrafts charge an annual rate of almost 40%. . “
How does Ikea’s new financing option work?
You can take out a loan for purchases between Â£ 99 and Â£ 15,000 and repayments can be spread over time – between 3, 10, 24, 36, 48 months.
Your options will depend on the amount you borrow.
You pay no interest, and you can apply for the loan while shopping in-store or online, and when purchasing any Ikea product except food.
The loan may also include the cost of delivery and installation of the kitchen.
To be eligible, you must be over 18, have valid photo ID (full driver’s license or passport).
How much can I borrow?
IKEA’s loan can cover purchases between Â£ 99 and Â£ 15,000 with repayments over three months to four years, if you are eligible.
- Between Â£ 99 – Â£ 299 – 3 months
- Between Â£ 300 – Â£ 599 – 3 or 6 months
- Between Â£ 600 – Â£ 1199 – 3, 6 or 10 months
- Between Â£ 1,200 – Â£ 2,999 -6, 10 or 24 months
- Between Â£ 3,000 and Â£ 4,999 – 10, 24 or 36 months
- From Â£ 5,000 and over -24, 36 or 48 months
You will need to provide your home address for the past two years and your employment status.
You can apply online or with the IKEA Finance app and you will need to avail the loan within 90 days of applying.
A decision is instantaneous, unless your request does not require further verification and you will then be contacted within three working days.
There is a âsoftâ credit search to establish your eligibility before a complete application, and it will not affect your credit score.
But a full credit check is done after you submit your application and it will be flagged when you get to this point in the process.
There is a charge of Â£ 12 for a missed payment and anyone who has trouble keeping up with refunds should contact Ikano Bank, where their customer service can help.
What financing did Ikea offer before?
Previously, Ikea offered 12, 24 or 36 month interest-free credit on purchases over Â£ 600 or over Â£ 250 in select stores for a limited time as a special offer. It was only available in stores.
He also offered loans with repayments of 12, 24, 36, 48 or 60 months, starting at Â£ 300, but with an interest rate of 7.9%. Again, this was only in stores.
Ikea also offered the option of paying with Paypal credit for online purchases. This offered four-month interest-free credit on purchases over Â£ 99.
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Anyone who has used these old financing options and continues to repay it will continue to repay the money normally and the terms of the loan have not changed.
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