In the age of the “gig” economy and the remote workplace, a computer has become an essential way to make a living. Unfortunately, it’s also equipment that must often be supplied by the worker. Is it possible to finance a computer with bad credit? Keep reading to explore your financing options so you can get the tools you need for the job.
Do You Need a Computer?
A computer is the hub of every home office. The Bureau of Labor Statistics reports that 27.5% of American employers allow employees to work from home for at least a portion of the week[1]. And as of 2021, nearly 16% of Americans had gained income from the “gig” economy[2].
If you work from home or you’re some type of contractor, a computer may be essential for your income. If your employer doesn’t provide you with a computer, you’ll need to buy or finance your own.
Even if you already own a computer, you may need to upgrade your setup in order to run essential software or match your employer’s specifications. If your computer fails, you may need to replace it quickly, whether or not you have cash on hand.
Before you pursue financing options, you’ll need to determine whether a computer is something you really need. If you do need a computer, you’ll need to decide how much computing power you need. Computers come in a huge range of specs, with prices generally ranging from $300 to $3,500 depending on configuration and brand. Don’t pay more for features you won’t use[3].
If you already struggle with poor credit, you don’t want to run the risk of taking on additional debt or damaging your credit with missed payments. So, how do you finance a computer with bad credit, then?
Is Financing a Computer a Smart Idea?
Financing isn’t for everyone. Financing any purchase allows you to:
- Complete the purchase without waiting to save enough money.
- Shop around for the best financing options.
- Rebuild your credit by making consistent, on-time payments.
But on the other hand, financing items such as computers doesn’t always make sense. That’s because financing can:
- Cause you to pay more in interest charges.
- Change your debt-to-income ratio.
- Present opportunities for missed payments that lower your credit score.
Additionally, your financing option may be influenced by different credit types. Revolving credit (such as a credit card or line of credit) will offer flexible financing but may not offer the same amount of money as an installment loan.
Ways to Finance a Computer With Bad Credit
Consumers are facing record-setting costs for basic necessities, so it’s understandable that you might not have the funds to purchase a new computer outright. But if you need to buy a computer right away, you can explore the following ways to finance a computer with bad credit.
1. Credit Card
Your first computer financing option might already be in your wallet. Using a credit card to purchase a computer means you’ll get the laptop or desktop you need today and then pay your credit card balance over time.
Of course, if you have poor credit, you may not have a sufficient credit limit to cover the entire purchase. You can still fund a portion of the purchase with your credit card and then pay the remainder out of pocket.
➕ Pros:
Positively, credit card purchases offer:
- A simple, direct form of payment.
- The chance to rack up reward points.
- Safe, secure payments.
Some retailers may even offer a discount on your first purchase when you apply and use a store credit card.
➖ Cons:
Credit cards also come with drawbacks.
- High-interest rates.
- Low credit limits (preventing you from making a large purchase).
- Damaged credit if you miss payments, run a high balance or apply for too many cards.
As with any loan, failing to make timely payments can cause your credit score to drop even further.
2. In-Store Financing
In these challenging times, many consumers might not have the funds to buy a computer outright. However, if you’re looking to finance a computer with bad credit, several retailers offer in-store financing options. The exact terms and conditions vary between retailers, but you’ll generally pay a down payment (often a percentage of the total purchase) and then make installment payments directly to the retailer over time.
Unlike traditional lenders, in-store financing doesn’t determine your eligibility solely by your credit score. In fact, retailers use this as a selling point to secure business from those who would otherwise be unable to buy a computer. Just watch out for hidden fees and high interest rates.
➕ Pros:
On the plus side, in-store financing:
- Is available regardless of your credit score.
- Lets you deal directly with the merchant.
- May include discounts from some retailers.
In-store financing might, therefore, be a solid option if your credit score prevents you from other financing options.
➖ Cons:
While every retailer is different, in-store financing has some drawbacks, such as:
- Potentially high interest rates.
- Hidden fees (origination fees, administrative fees, etc.)
- Prepayment penalties that prevent you from paying the loan off early.
Don’t forget that even though you’re dealing with a lender rather than a loan company, missed or late payments can still impact your credit score.
3. Buy Now, Pay Later (BNPL) Programs
While some retailers offer a “buy today, pay later” option for in-store financing, a growing number of third-party apps allow you to complete major purchases and then make payments over time. Apple Pay Later, for example, is a popular choice.
BNPL apps will complete the purchase for you and then split the purchase into a series of equal installments. The best BNPL providers can even do so with little to no interest and minimal fees, making them a great choice for people looking to finance a computer with bad credit.
➕ Pros:
BNPL apps provide:
- Flexible payment options.
- Fast approval times.
- No interest or interest rates are lower than consumer credit cards.
Most importantly, the credit needed for a BNPL app is usually much lower than other financing types, and some providers don’t require a credit check at all.
➖ Cons:
On the other hand, BNPL platforms have drawbacks, such as the following:
- It can be difficult to keep track of payments.
- Some users can get stuck with repayments after the item is returned.
- Missed payments can still result in late fees and damage to your credit.
Additionally, splitting a major purchase into equal installments might still mean that each payment is high. Make sure to find out the exact payment terms before committing to a BNPL option.
📊 Learn more: Dive into the latest Buy Now Pay Later (BNPL) statistics to understand current consumer trends.
4. Personal Loans
Another way to finance a computer with bad credit is by taking out a personal loan. Personal loans are one of the most flexible forms of financing around, and some lenders may offer better interest rates than your credit card.
Some lenders offer personal loans as low as $1,000, which may be perfect for financing your new computer. The major drawback is that personal loans typically have higher credit requirements than other options on this list, so check the lender’s requirements before applying.
➕ Pros:
Personal loans are ideal if you’re looking for:
- Fast approval time.
- Flexible options for financing.
- Clear loan terms.
Generally, personal loans don’t require collateral, which means you can apply for a loan without committing any of your existing assets.
➖ Cons:
Here are some reasons why personal loans aren’t always a good option for those with bad credit:
- Lenders tend not to approve financing for bad credit.
- Loans that are available with bad credit may have high fees and interest rates.
- Fees and penalties can be high for missed payments.
- Just applying for a personal loan can hurt your credit.
Still, if you can find a lender who will work with your credit score, this may still be an option for computer financing loans.
5. Business Loans
Are you buying a new computer to support your own business? This is common among copywriters, graphic designers, or other freelance professionals. If your computer is going to be used for business purposes, you might be able to finance a computer with bad credit by getting a small business loan.
Equipment loans are a particularly attractive option since they’re already designed for buying things like computers and office equipment. Even office furniture can be financed with an equipment loan, though lenders may ask you to detail what items you’ll be purchasing when you apply.
➕ Pros:
An equipment loan may be a strong option if:
- You’re using the computer solely for business purposes.
- You also need to fund software or other office equipment.
- You have stronger business credit than personal credit.
If you’re a business owner, you should already be keeping your business and personal finances separate. This means that your lender might not even look at your personal credit history.
➖ Cons:
The obvious drawback is that you’ll only qualify for business/equipment loans if you have an established business. To qualify, you’ll need to:
- Demonstrate that you’re an established business with a clear legal structure.
- Provide the lender with a copy of your business plan and financial statements.
- Have a strong business credit score.
Here’s where it gets tricky. While some lenders will focus on your business credit score to determine your loan eligibility, others might also examine your personal finances, which can still make it hard to secure business loans with bad credit.
Alternatives to Computer Financing Loans
The above options can potentially help you finance a computer with bad credit. But any type of financing will add to your debt load and potentially impact your credit score, especially if you miss a payment. For these reasons, it may be helpful to consider one of the following alternatives to financing loans.
1. Delay the Purchase and Save Your Money
The best way to avoid finance charges altogether is to pay for your computer outright. Sure, it may take a little longer to save up, but if you can delay your purchase until you have the money, you’ll be able to buy a computer without all of the added interest charges or a monthly bill.
2. Look for Bargains
A computer might be within easier reach than you think. Make sure you’re not trying to buy more computers than you need. And, before you look for loans for bad credit, shop around for computer bargains. For example, some retailers may offer “open box specials,” where you get like-new products at a steep discount.
Some electronics manufacturers also offer refurbished computers that still come with a warranty. These options translate into major savings and eliminate the need for third-party financing.
3. Crowdsharing
Why not ask your friends or social media followers for financial support? This can be a great option when launching a new business. Crowdfunding platforms let you request donations by posting messages like, “Come support my new graphic design business!”
The crowdfunding platform will usually take a cut of this money, but the rest is yours. Business owners might offer something in return for support — such as a discount or early access to your services — but your fan base may prove more supportive than your credit bureau.
Make Your Purchase Count
In the current economic climate, many consumers are exploring how to finance a computer with bad credit due to the necessity of these devices in daily life. Computer shoppers have a number of options when it comes to buying new laptops or desktop computers. Do your research, as lenders vary when it comes to interest rates and loan terms. Financing will almost always cost more than buying an item outright, but following this guide can help you reach the best decision when you’re making an essential purchase.
