Should you borrow money from a DIY store?

Sue Hayward
23 August 2019

You’ve got exciting plans for home improvements – be it a brand new kitchen or bathroom, or an even bigger project. Then reality sinks in: how will you pay for it? The answer could be borrowing from a big DIY store. But are their deals all they’re cracked up to be?
 

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There’s nothing like the days shortening and the thought of longer evenings at home to get us heading to the DIY store, full of inspiration and ideas to spruce up our home. But what about how we’re going to pay for it all?

If you’re after a few pots of paint to add a splash of colour to your lounge or hall, then you might be able to make it past the till without significantly denting your bank balance.

But for bigger projects such as new bathrooms or kitchens, there may be times when you need to borrow extra money.

Saving up first is the ideal option, but if you know you can pay it back and can borrow cheaply, a loan can be a good option.

Many stores, including Homebase, B&Q, Wickes and Ikea, offer 0% finance deals. If you take this interest-free option, it means you won’t pay a penny in interest, providing you stick to the rules and clear the balance within the agreed time.

You can borrow the money to cover everything from a new kitchen, bathroom or bedroom to other purchases such as garden furniture, heating and tiling projects, or even a hot tub.

Borrowing this way can sound like the easy option as, once you’re in store, someone will be on hand to take you through the process and you’ll usually get an instant decision.

But is it always the best deal or could you be better off going for other options, such as a 0% credit card or a low-cost loan?

What’s on offer?

Homebase and B&Q are the largest players in the DIY stores market.

The Homebase 0% interest-free deal covers any in-store purchases from a minimum spend of £2,000, and this can be a mix of anything from kitchens and bathrooms to tools or gardening. But it also throws in a ‘Buy Now Pay Later’ option to extend your payments beyond the 0% period, which is when interest can kick in.

B&Q also offers a 0% interest-free deal (with a minimum spend of £500), available on bathrooms, kitchens, bedrooms, heating, flooring, garden furniture, hot tubs and tiling. But, like Homebase, it too has other payment options that incur interest.

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Make money from DIY-store deals

If you’ve got sufficient savings, you can of course pay outright for any purchases with no need to borrow. But if you can bag a 0% deal, then even with the current low savings rates, you can boost your savings with some interest by opting for the interest-free option.

Bag cashback on purchases

If you’ve got the money to clear the bill in full, it can also be worth using a cashback credit card. The American Express Platinum Everyday Cashback card is fee-free and pays 5% cashback on spending over the first three months up to a maximum of £100 in cashback. So that means you could earn £50 on a £1,000 spend.

Use your credit card as an extra tool

If you’re tackling smaller projects such as painting the spare room and don’t have any spare cash in your bank account, then providing you can pay it back, you’re likely to be better off using an interest-free credit card to pay the bill. This is because the DIY stores tend to have ‘minimum borrowing’ limits of at least £500 for their 0% finance deals. So if you need to borrow less, you could look for a credit card with a 0% deal on ‘new purchases’. There are currently deals available offering up to 27 months at 0%.

If you only need to borrow enough to see you through until next pay day, an everyday credit card (regardless of the interest rate) can do the job. Most give you 56 days’ interest-free credit, according to the Moneyfacts financial comparison site. So if you time your purchase and buy the day after your credit card bill arrives, your DIY spending won’t appear till the next month’s statement, so you’ll get about another month to pay off the bill.

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Protect yourself

Paying by credit card comes with an added bonus as you’ll get built-in protection in the form of ‘Section 75’. This is part of the Consumer Credit Act, and is enshrined in law, which means that if what you’re buying costs between £100 and £30,000, you can ask your credit card company to stump up if the company you’re buying from goes bust, or goods don’t arrive or are faulty.

The usual course of events is that you’d approach the retailer first, but if they’re no longer trading or won’t help, under consumer law your card company must reimburse you.

For debit cards there’s more limited protection, as the ‘chargeback’ system isn’t legally enforceable.

Is it worth taking a personal loan?

If you need a short-term loan of two to three years, a 0% finance deal at the DIY store or interest-free credit card deal is likely to be cheaper than a loan.

With most personal loans, minimum borrowing starts from £1,000, with terms from one year. Rates are often lower the more you borrow, but if you’re looking to borrow between £3,000 and £5,000, the best deals around charge 6.5% a year but could vary, depending on your credit score. By comparison, borrowing the same amount for purchases at B&Q could net you a 0% deal for up to four years.

However, personal loans can be a better option for bigger and longer-term borrowing. Sainsbury’s Bank says the average loan for big home improvements is £10,955, and in this case you can get loans of less than 3% a year, with repayment terms of up to seven years.

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“We had funds but still took the finance”

Sharon Hughes (above), who’s 47 and from Hertfordshire, spent £10,000 on her new kitchen at B&Q. Instead of stumping up from her savings, Sharon chose to take B&Q’s 0% interest-free deal and spread her payments over four years.

“We borrowed £10,000, which covered everything including all the kitchen units, a double oven, integrated fridge freezer, dishwasher and tumble dryer,” she says.

“I’d spent a lot of time shopping around and we got kitchen plans and prices from four different retailers, but we thought both the product and price was best at B&Q. The store then agreed to ‘price match’ all the electrical appliances against online retailers, too.

“We did have the funds to pay for the kitchen, but as the offer of interest-free finance was there, it meant we knew we could cover the bill but didn’t have to pay the lot in one go.”

How do the DIY 0% deals stack up?

Store: B&Q Deal 1

Deal: Interest-free credit available from six months up to four years
Minimum spend: From £500
Deposit and details: No deposit needed
T&Cs: Can be used for bathroom and bedroom projects. Depending on repayment terms, may also be used for kitchens, heating, garden furniture, tiling, flooring and hot tubs

Store: B&Q Deal 2

Deal: Buy Now Pay Later
Minimum spend: From £500
Deposit and details: No deposit needed. No payments to make for up to a year. No interest if balance cleared within one year. Beyond one year, payments can be spread over three years charged at 8.9% interest.
T&Cs: Available on kitchens, bathrooms, bedrooms, heating, flooring, tiling, garden furniture and hot tubs

Store: Homebase Deal 1

Deal: 0% interest-free credit available from one to three years
Minimum spend: £2,000 for one year, £3,000 for two years, £4,000 for three years
Deposit and details: No deposit needed
T&Cs: Finance deals available on any in-store purchases of £2,000 or more

Store: Homebase Deal 2

Deal: Buy Now Pay Later
Minimum spend: From £2,000 up to £50,000
Deposit and details: No deposit needed. No interest charged if amount borrowed is repaid within six, nine or 12 months depending on the loan amount. Minimum spend of £2,000 for six-month term, £3,000 for nine months and £4,000 for 12 months.
T&Cs: If you don’t repay in full within the allotted timeframe you can extend payments up to a further three years, but interest will be charged at 9.9% APR

Store: Ikea

Deal: 0% for one to three years
Minimum spend: £600 for 12-month deal, £1200 for 24 months, £3,000 for 36 months
Deposit and details: £10 deposit needed
T&Cs: Available on kitchens, bedrooms and living rooms

Store: Wickes Deal 1

Deal: Buy Now Pay Later. (0% finance if balance paid within one year)
Minimum spend: No minimum spend
Deposit and details: 10% deposit needed. No interest to pay if balance paid in full within 12 months of agreement date.
T&Cs: Available on showroom kitchens & bathrooms. Beyond 12-month period there is the option to spread payments for further four years but interest charged at 6.9%. Interest will also be charged for the initial one year period if this extension period is taken.

Store: Wickes Deal 2

Deal: Fixed monthly payments (incurs interest)
Minimum spend: No minimum spend
Deposit and details: Fixed monthly payments from one to eight years with interest at 4.9% APR for one to four years and 6.9% for five to eight years
T&Cs: Available on showroom kitchens and bathrooms

Source: Moneywise, as at 9 August 2019

Sue Hayward is a financial journalist who has written guides for NatWest and Barclays, and appeared on Sky News and Radio 4

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