How does the Ikea financial services loan work? | MyWalletHero

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Ikea has upgraded 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 of time.

Interested? Let’s take a look.

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What is the Ikea financial services loan?

If you are a fan of the Swedish retail giant, then you will be pleased to hear that Ikea has introduced an interest-free credit option to its finance products.

The Ikea financial services loan is available on purchases from £99 to £15,000. Repayments can be spread over periods of between three months and four years.

The deferred payment scheme is interest free. This means that you can pay off your purchase during your selected time frame without incurring any interest charges.

How does it work?

You can apply for the Ikea financial services loan in store, online or by downloading the Ikea finance app.

How much you borrow will determine the duration 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 above – 24, 36 or 48 months

The maximum amount you can borrow is £15,000.

It is worth noting that this is a loan, not a ‘buy now, pay later’ scheme. So Ikea asks that you prove your employment status and provide a valid ID and proof of address for the last two years. You will also have to undergo a credit check in order to secure the loan.

What are the advantages?

The new option from Ikea is more flexible than its previous offerings. The company has offered a range of options for spreading the cost of purchases, including a loan with interest and interest-free credit in-store. But the minimum repayment for those options was 12 months and customers needed to spend at least £300.

The new Ikea financial services loan is available on lower amounts and over more flexible time periods. Working much more like PayPal credit or Klarna, it gives customers the option to borrow a small amount and repay it in a few months.

If you are purchasing a bigger ticket item, you can borrow more and spread the cost over a longer time period.

The big advantage is that the loan is interest free. So, as long as you keep up with your repayments and clear your purchases in the set time period, you won’t have to pay any interest.

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Is there a catch?

The loan is subject to availability. In fact, when researching this article, I was met with 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 that you will receive that amount that you want.

It is also worth bearing in mind that you will be subject to a full credit check when you submit your application. This will show on your credit report. And if your application is rejected, you risk damaging your credit score.

Finally, as with any sort of store credit, you can only use it for purchases with the specified retailer. If you do need to borrow money for big-ticket items like furniture, then a 0% purchases card acts the same way but can be used at multiple retailers.

You can also check whether you would be eligible for a 0% purchases card before applying by using things like a credit card eligibility checker. This could minimise the risk of your application being rejected and therefore protect your credit score.

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