Famsa is a furniture and appliance retailer that also offers financing options like Famsa loans to its customers. Famsa loans allow customers to finance furniture, electronics, appliances, and more from Famsa stores. In this comprehensive guide, we’ll cover everything you need to know about Famsa loans including how they work, requirements, benefits, drawbacks, alternatives, and tips for getting approved.
What is Famsa?
Famsa is a furniture and appliance retailer with over 100 store locations across the southern and southwestern United States. The company was founded in 1970 in McAllen, Texas, and has since grown to become one of the largest Hispanic-owned retailers in the country.
In addition to selling brand-name furniture, mattresses, appliances, and electronics, Famsa also offers customized payment plans and financing options to help make purchases more affordable for customers. One of the financing options they provide is Famsa loans.
What are Famsa Loans?
A Famsa loan is a type of financing that can be used to purchase items from any Famsa store. Famsa offers both closed-end and open-end loans.
Closed-end loans are fixed-term installment loans. This means you borrow a set amount to be repaid over a predetermined number of months with fixed monthly payments.
Open-end loans work more like revolving credit accounts or lines of credit. You have a maximum credit limit and can use the funds as needed. You’ll make a minimum monthly payment based on your balance.
Both loan types can provide an easy way to finance big-ticket purchase items, spread costs over time, and build credit.
Famsa Loan Requirements
To qualify for a Famsa loan, there are a few basic eligibility requirements:
- Minimum age requirement of 18 years old
- Valid photo ID
- Social Security number
- Regular source of income
- Minimum income requirements vary but typically $800 – $1,000 or more per month
- Cannot currently be in active bankruptcy
- Send bankruptcy must be discharged for 12 months minimum
- No outstanding bad debts with Famsa
Famsa will also do a credit check and evaluate your credit scores and history to determine eligibility and loan terms. They can provide financing to borrowers with bad credit or no credit, but better scores may qualify you for lower rates.
How Do Famsa Loans Work?
The loan application and approval process is straightforward:
- Select items you want to purchase at Famsa – you can apply the loan to anything sold at Famsa including furniture, appliances, electronics, computers, jewelry, and more.
- Apply for financing – you can quickly apply at the store when checking out. You’ll provide contact information, income documentation, and ID.
- Get a financing decision – approval decisions are fast, often in just minutes or hours, since Famsa processes applications in-house.
- Sign loan agreement – If approved, you’ll sign your closed-end loan agreement or open-end credit account agreement. This outlines the loan amount, fees, interest rate, term length, and payment schedule.
- Make your purchases – your loan funds or credit line can be used right away to purchase the items you applied for.
- Make monthly payments – repay your Famsa loan by making monthly installment payments (closed-end loan) or minimum payments (open-end credit). Payments can be made in-store, online or over the phone.
Famsa Loan Amounts
Famsa offers both small and larger loan amounts to furnish an entire room or whole home:
- The minimum loan amount is typically $200
- Maximum loan amount varies but can reach up to $10,000 or more
The specific loan amount you can qualify for will depend on factors like your income, credit history and existing debt obligations. Famsa wants to make sure you can manage the monthly payments on any loan they approve.
Famsa Loan Terms
Famsa closed-end loan terms are available from 12 months up to 36 months (3 years). Longer terms are available on larger loan amounts to keep payments affordable.
Some common loan term examples include:
- 12 months – for smaller loan amounts around $500
- 18 months – for loan amounts between $1,000 to $2,000
- 24 months – for mid-size loan amounts from $2,500 to $5,000
- 36 months – for larger loan amounts over $5,000+
Open-end Famsa credit accounts can remain open as long as you manage the account responsibly.
Famsa Loan Interest Rates
Interest rates on Famsa loans will vary depending on the loan type, your credit scores, income and other eligibility factors.
Here are some general Famsa loan interest rates you can expect:
- Closed-end loans – rates from 16.99% to 29.99% APR
- Open-end credit accounts – rates from 16.99% to 29.99% variable APR
Higher credit scores in the good to excellent range (690+ on the FICO scale) qualify for the lowest interest rates. Limited credit or low scores can lead to higher rates.
Famsa Loan Fees
When you take out a Famsa loan, there are a few fees that may apply:
- Origination fee – one-time fee to process and set up the loan, typically $39
- Annual fee – for open-end credit accounts, around $39 per year
- Late fee – up to $10 if payment is more than 15 days late
- Returned payment fee – up to $30 if payment check bounces
Any fees should be disclosed during the application process before you accept the loan. There are no prepayment penalties if you pay off your Famsa loan early.
Benefits of Famsa Loans
Famsa loans offer several advantages for financing furniture and appliances:
- Fast approval – Get approved and receive funds often the same day. Quick and convenient in-store application process.
- Flexible terms – Choose a monthly payment term from 12 to 36 months that fits your budget. Open-end credit provides ongoing flexibility.
- Variety of items – The loan can be used to buy anything Famsa sells, allowing you to furnish as needed.
- Special offers – Famsa provides loan discounts on certain items and sales events.
- Credit building – Responsible use can help establish or rebuild credit history.
- Buy now, pay later – Pay over time for major purchases instead of all upfront. Avoid tapping savings or high-interest credit cards.
No collateral – Famsa loans are unsecured with no property/assets required as collateral.
Drawbacks of Famsa Loans
While Famsa loans have advantages, there are some potential downsides to consider as well:
- High APRs – Interest rates start quite high, even for applicants with good credit. Rates from 16.99% to 29.99% APR are common.
- Risk of overspending – Easy access to financing may tempt you to overspend on wants rather than needs.
- Missed payment fees – Late or returned payments result in additional fees. Set up autopay to avoid.
- Credit impact – Famsa will do a hard credit check which can temporarily lower your scores. Too many inquiries can be seen negatively.
- Famsa-only – Loan funds can only be spent at Famsa. Limits flexibility compared to cash or other financing.
- Debt obligation – As with any loan, taking on debt results in a repayment responsibility that reduces available income each month.
Alternatives to Famsa Loans
Other options beyond Famsa loans that can be used to finance furniture and appliance purchases include:
- Retailer financing – Many national chains like Best Buy and Rooms To Go offer store-specific credit cards and payment plans.
- Credit cards – General purpose credit cards through Visa, Mastercard, etc. can be used if you have sufficient available credit.
- Personal loans – Banks, credit unions and online lenders offer installment loans that bring funds directly to you.
- Home equity loans/lines – Tapping available equity in your home is an option for homeowners.
- Layaway programs – Some old-fashioned layaway programs let you slowly pay off items over time before taking them home.
- Buy now, pay later plans – New plans from companies like Affirm allow fixed installments paid directly to retailers.
- Credit builder loans – These savings-secured loans are designed specifically to establish credit history for those who need them.
Tips for Getting Approved for a Famsa Loan
If you have your eye on some furniture or appliances at Famsa but have less-than-perfect credit, here are some tips that can help your chances of getting approved for a Famsa loan:
- Shop during sales and promotions to take advantage of any special financing offers.
- Apply for the lowest loan amount you need to keep payments manageable.
- Avoid applying for new credit before your Famsa application. Too many new inquiries can lower scores.
- Bring proof of income such as recent paystubs to help verify your ability to repay.
- Build your credit before applying if possible. Maintaining low balances on credit cards can help improve scores.
- Bring a qualified co-signer with good credit on your application. Their positive history can offset your challenges.
- Prepare to make a larger down payment if your credit situation requires it.
At the end of the day, Famsa wants to feel confident you can handle the monthly payments. Anything you can do to demonstrate that ability can help.
Is a Famsa Loan Right for You?
Famsa loans allow you to turn the furniture, appliances and electronics at your local Famsa into affordable monthly payments. For major purchases, they can certainly beat shelling out hundreds or thousands of dollars upfront.
But before signing on the dotted line for a loan, be sure you evaluate the costs, risks and alternatives carefully. A Famsa loan makes sense for those with an immediate need who understand the terms and can comfortably make the required payments each month.
With flexible options for both good and bad credit borrowers, Famsa loans can provide an opportunity to get the items you want over time. But rely on discipline to avoid overspending and getting in over your head. Use Famsa’s financing responsibly as part of building your credit history over time.
Conclusion
Famsa loans offer a way for the retailer’s customers to finance needed furniture, appliances, and other household items over monthly installments. The closed-end loans and open-end credit provide set repayment terms and predictable payments that allow people to buy now and pay later. While interest rates and fees are high compared to other financing options, Famsa loans are easy to qualify for in-store and can be a helpful option for those with limited finances or credit challenges. By understanding the costs and using Famsa financing only for essential purchases, customers can benefit from accessing the items they need while improving their credit standing for the future.
