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Whether you shop at Kmart, IKEA or Pottery Barn, the cost of furnishing your home respectively racks up significant costs for any Australian household. You may be purchasing your first home, buying to let, moving into an unfurnished rented property, or just fancy a revamp. Whatever the reason you’re buying furniture, you want to make sure the process doesn’t pull the financial rug from under you.

One of the ways to do this may be with a personal loan.

Can I get a personal loan to buy furniture for my home?

Personal loans are available for all sorts of home improvements and renovations. You will however need to check your eligibility for any sort of personal loan. Your credit score and income will affect your ability to get a loan and what rates you are offered.

You should always consider your credit score before comparing and applying personal loans. You can check your credit score here www.mycreditfile.com.au . Unfortunately having a bad credit score will affect the interest rate you are offered on your loan, but this doesn’t necessarily mean that lenders won’t lend to you. For information on how to apply for a personal loan with bad credit, look here . 

Why should you compare personal loans?

While you may be tempted by the flashy advertising of Australia’s big 4 banks; Commbank, NAB, Westpac and ANZ, it is always worth comparing loans from a range of lenders. Nobody wants to end up paying more than they should.

You may find that the lowest interest rates are found with lesser known lenders, and if you have bad credit, it may be the case that larger institutions such as the big 4 are unlikely to take you on as a borrower. So, shop around and make sure you find the loan that’s right for you. To compare personal loans, click here

When comparing personal loans you should consider

Personal loan feature About
The loan amount. Make sure what you are borrowing is something that you can realistically pay back, along with the interest. Work out a budget and don’t borrow more than you need. To cover yourself in case of unforeseen extra costs, there are loans available that have redraw facilities.
Secured or unsecured loans. Whether you have a secured or an unsecured personal loan may largely affect your interest rate. Secured loans tend to have lower interest rates because the loan is secured against the borrowers’ asset(s).

Fees and charges.

Please note that loans with a lower interest rate might come with fees and charges that end up making it more expensive. Loans without fees and charges are out there, credit score willing. Don’t be caught out by hidden costs.


You might want to find a loan that lets you make extra repayments when you can and get it paid off quicker. The quicker you pay it back the less interest you pay. Keep an eye out for early exit fees – otherwise, you might feel trapped if you want to leave the loan early.


Many people now opt for the convenience and speed of applying for a loan online. This can be a benefit as some financial institutions have online access only, and not having branches often allows them to offer their customers lower rates. However, some people prefer a personal touch and may want a lender with which they can speak to someone face-to-face.

Where can I get a personal loan for home furnishings?

There are many different lenders that, depending on your credit score and eligibility, are likely to be willing to provide you with a personal loan to finance your furnishings.

See the table above for a selection of lenders and their comparison rates. RateCity is dedicated to helping you find personal loans that best suit your personal circumstances.

Financing furniture after buying a house

It is extremely unlikely that you will have bought your home straight off the bat, looking like the pages of Vogue Living magazine, because you are not Kim Kardashian (no matter how many squats you do).

Buying a house is often the biggest expense in any person’s life, but the expense doesn’t stop once the purchase has gone through and the deal is closed. And unless you are a DIY wizard with an endless supply of materials, you will have to finance and buy the stuff that makes a house a home: the furniture.

Can you use your home loan to buy furniture?

While some people may choose to purchase their furniture with their home loan, there are reasons why this may not be your best option.

Rolling extra costs into your mortgage may well end up being much more expensive over time. Furnishing a home can cost up to 25% of the value of the property. So, if your home is worth $300,000, that could mean that kitting it out could cost as much as another $75,000.

Even though home loans tend to have the lowest interest rates, they also take the longest to pay back. If you were to borrow that on top of your mortgage, on an interest rate of 4.09%, you could be paying an extra $52,196 in interest over 30 years. And presumably, you won’t even be sleeping on that same mattress that you’re still paying for 30 years down the line.

If, however, you were to borrow the same amount in a secured or an unsecured personal loan that you intended to pay off over the course of 5 years, even at a higher rate, you would be paying a fraction in total interest.

How can I save money on furniture for my home?

Other things worth considering when furnishing your home is whether you can cut the costs on the furniture itself. There are plenty of options online for purchasing cheap second-hand furniture, like Gumtree and Craigslist. Or of course budget stores.

Building your furniture up over time, when you can afford to buy it, may save you cash, but you may also prefer to buy it at once for convenience. This is down to individual taste and circumstances.

The most important thing is that you compare and weigh up your options, seek professional financial advice where you can, and enjoy your fantastic furniture.

Frequently asked questions

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

How much can you borrow with a bad credit personal loan?

Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans, they also get loaned less money. Each lender has its own policies and loan limits, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

Can I merge my personal loan with my home loan?

Yes, you can refinance your home loan and, in the process, merge or consolidate your personal loan and home loan. By doing so, you can lower the number of debts you have, and you may also reduce the total interest you have to pay.

However, you should consult a financial advisor or a mortgage broker to confirm that you are decreasing your total outstanding debt, including interest payments. The repayment term for a home loan can be much longer than that for a personal loan, and by merging the two, you could be repaying a higher amount over the full term.

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

Do student personal loans require security?

While some personal loans can be secured by the value of an asset, such as a car or equity in a property, student personal loans are often unsecured, which typically have higher interest rates.

Some lenders also offer guarantor personal loans to students. These loans have lower interest rates, as a guarantor (usually a relative of the borrower with good credit) will fully or partially guarantee the loan, taking on the financial responsibility if the borrower defaults.

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

Is a personal loan a variable or fixed-rate loan?

Depending on the personal loan lender, you may be able to choose between a fixed and a variable interest rate. But, there are a few distinct differences between the two, so it’s important to weigh up the pros and cons before deciding on what’s right for you.

A fixed interest rate loan gets you the convenience of knowing exactly how much you need to repay each fortnight or month. On the other hand, you generally won’t be able to make lump sum or advanced payments to close your personal loan early - or at least not without a penalty.

With a variable interest rate personal loan, you may be able to get a longer loan repayment term, with the option of paying off the loan early. You typically won’t need to pay any additional charges for an early full repayment either. The potential disadvantage with an interest rate that can change is that your repayment is not entirely predictable, as it can fluctuate with the market. However, you’ll likely have more options as more lenders offer a variable interest rate personal loan.

What is an unsecured bad credit personal loan?

A bad credit personal loan is ‘unsecured’ when the borrower doesn’t offer up an asset, such as a car or jewellery, as collateral or security. Lenders generally charge higher interest rates on unsecured loans than secured loans.

Does refinancing a personal loan hurt your credit score?

Personal loan refinancing means taking out a new loan with more desirable terms in order to access a more competitive interest rate, longer loan term, better features, or even to consolidate debts.

In some situations, refinancing a personal loan can improve your credit score, while in others, it may have a negative impact. If you refinance multiple loans by consolidating these into one loan, it could improve your credit score as you’ll have only one outstanding debt liability. Your credit may also improve if you consistently pay the instalments on time.

However, applying to refinance with multiple lenders could negatively affect your credit if your applications are rejected. Also, if you delay or default the repayment, your credit score reduces.

What do credit scores have to do with personal loan interest rates?

There is a strong link between credit scores and personal loan interest rates because many lenders use credit scores to help decide what interest rates to offer to potential borrowers.

If you have a higher credit score, lenders will probably classify you as a lower-risk borrower. That means they’ll be keen to win your business, so they may offer you a lower interest rate if you apply for a personal loan.

If you have a lower credit score, lenders will probably classify you as a higher-risk borrower. That means they might be concerned about you defaulting on the loan and costing them money. As a result, they might protect themselves by charging you a higher interest rate.

Can I get an easy/instant personal loan?

Some lenders are able to approve applications with little documentation and within minutes. However, there is a catch. People who take out easy/instant loans generally pay higher interest rates and are restricted to lower amounts than people who follow a traditional borrowing process.

What causes bad credit ratings/scores?

Failing to repay loans and bills will damage your credit score. So will falling behind on your repayments. Your credit score will also suffer if you apply for credit too often or have credit applications rejected.

How long does it take to get a bad credit personal loan?

In the best-case scenario, an application for a bad credit personal loan can be made within minutes and then be approved within 24 hours. However, if a lender needs more information or needs more time to verify the provided documents, the application process may take longer.

How are credit ratings/scores calculated?

Different credit reporting bodies may use different formulas to calculate credit scores. However, they use the same type of information: credit history and demographic profile.

They’re likely to look at how many credit applications you’ve made, which lender the applications were for, what purpose they were for, how much they were for and your repayment record. They’ll also look at your age and postcode. They’ll also look to see if you’ve had any bankruptcies or other relevant legal judgements against you.

Your score can change if your demographic profile changes or new information is added to your file (such as a new loan application) or existing information is removed from your file (i.e. because it has reached its expiry date).

What is bad credit?

A person is deemed to have ‘bad credit’ when they have a poor history of managing credit and repaying debts.

How are personal loans regulated?

Personal lenders in Australia are regulated by ASIC (the Australian Securities & Investments Commission) and must follow responsible lending rules. That means they can’t lend money without making “reasonable inquiries” about a borrower’s financial situation and ensuring the loan is “not unsuitable” for them.

Can I get a personal loan if I receive Centrelink payments?

It is hard, but not impossible, to qualify for a personal loan if you receive Centrelink payments.

Some lenders won’t lend money to people who are on welfare. However, other lenders will simply consider Centrelink payments as another factor to weigh up when they assess a person’s capacity to repay a loan. You should check with any prospective lender about their criteria before making a personal loan application.

Who calculates your credit rating/score?

Credit ratings or credit scores are calculated by credit reporting bodies. The main bodies are Equifax, Dun & Bradstreet, Experian and the Tasmanian Collection Service.