How does the Ikea Financial Services Loan work?
Ikea has improved its financing options to include the Ikea Financial Services Loan. This deferred payment option can be used for lower amounts and over a flexible period.
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What is the Ikea Financial Services Loan?
If you’re a fan of the Swedish retail giant, you’ll be happy to hear that Ikea has introduced a interest free credit option to its financial products.
The Ikea Financial Services Loan is available for purchases from £ 99 to £ 15,000. Repayments can be spread over periods of between three months and four years.
The deferred payment plan is interest free. This means that you can pay for your purchase during the selected period without incurring any interest charges.
How it works?
You can apply for the Ikea Financial Services Loan in-store, online, or by downloading the Ikea finance app.
The amount you borrow will determine the length of the loan:
- £ 99 to £ 299 – 3 months
- £ 300 to £ 599 – 3 or 6 months
- £ 600 to £ 1,199 – 3, 6 or 10 months
- £ 1,200 to £ 2,999 – 6, 10 or 24 months
- £ 3,000 to £ 4,999 – 10, 24 or 36 months
- £ 5,000 and over – 24, 36 or 48 months
The maximum amount you can borrow is £ 15,000.
Note that this is a loan, not a “buy now, pay later” program. Ikea therefore asks you to prove your employment status and provide a valid ID and proof of address from the past two years. You will also need to undergo a credit check in order to secure the loan.
What are the advantages?
Ikea’s new option is more flexible than its previous offerings. The company offered a range of options for spreading the cost of the purchases, including an interest-free loan and an interest-free store credit. But the minimum payback for these options was 12 months and customers had to spend at least £ 300.
The new Ikea Financial Services Loan is available on lower amounts and more flexible periods. Working much more like PayPal or Klarna credit, it gives customers the option of borrowing a small amount and paying it back in a matter of months.
If you buy a larger item, you can borrow more and spread the cost over a longer period.
The big advantage is that the loan is interest free. So as long as you keep track of your refunds and clear your purchases within the allotted time, you won’t have to pay interest.
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Is there a catch?
The loan is subject to availability. In fact, while researching this article, I received a message saying, “Unfortunately, we are not taking applications at this time.” So there is no guarantee that the loan will be available when you need it or receive the amount you want.
It should also be borne in mind that you will be subject to a full credit check when you submit your application. This will show up on your credit report. And if your application is rejected, you risk damaging your credit score.
Finally, as with any type of store credit, you can only use it for purchases from the specified retailer. If you need to borrow money for big ticket items like furniture, a 0% shopping card works the same but can be used at multiple retailers.
You can also check if you’re eligible for a 0% shopping card before you apply by using things like a credit card eligibility checker. This could minimize the risk of your application being rejected and therefore protect your credit score.
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