How to Finance a New Piano

Are you in the market for a new piano? Unless you've managed to squirrel away some cash in a savings account, your new piano most likely will have to financed.

We spent last week shopping around for a new piano for our teenaged daughter and learned a few things about piano financing. While we ended up paying cash for her new piano, it was nice to learn that upgrading to a performance grand at some point in the future could be financed much like buying a new or used car. Here are the three ways a piano can be financed.

1. In house financing.

Most piano dealers have their own in-house financing programs with pretty decent terms. Just like financing a car, financing a piano with an in-house program calls for a credit check and a 10-20% down payment, with the piano serving as the collateral. In-house financing interest rates seem to run between 10-14% with payments spread over a 36-60 month terms. The down payment and interest rate is determined by the age of the piano, the amount being financed, and of course, your credit worthiness. In-house financing seems to be the most popular and easiest way of financing a piano.

2. Charging the piano on a credit card.

Most music stores accept major credit cards. If you already have a card, then there isn't any sort of credit check involved nor will you need to put down cash for a down payment. There are several disadvantage of charging a piano that came to my mind however. The interest rates are definitely higher plus there is no guarantee that the credit card company won't bump up the interest rate in the future. The other drawback is that if the purchase price of the piano exceeds 40% of your credit limit, your credit score could drop.

3. Financing the piano through your bank or credit union.

Of the different ways a piano can be financed, bank financing actually offers the best terms. Options include:
* Drawing against an existing home equity line of credit
* Advancing cash off your bank credit card, providing the interest rate is low AND you don't have to pay a transaction fee.
* Taking out a personal loan; current interest rates are between 5-8% depending on the type of piano (new vs used) plus you may have to pay a loan origination fee ranging from $100-200.

When it comes to buying a new piano, paying cash will always save you the most money. If financing is necessary, one of these three methods of financing a piano purchase may work for you.