No payments till 2007, etc? Wait till then to begin paying? Why is this good again? (1 Viewer)

[Ryan Wishton]

Why do people consider NO Payments types of deals for a couple years a good thing?

People generally get thrilled and say "I dont have to make any payments for a year or two" on an item. Why is this a good thing?

Who wants to get something & then start making payments on it when it's old already? I just never understood this.

I can understand if it's no interest/no payments for 6 months to a year or two. Then, if you pay it off completely during this time you basically got a free loan.

But, this whole get furniture, tv, or whatever with no payments till 2007 & then not make any payments till 2007? Your furniture or tv or whatever is old already & then you start making payments with interest to boot?

I just dont understand this. Any idea?

 

[BrettB]

Over 2 years to win the lottery?

 

[DaveF]

Save money to buy something. Buy it with no interests or payments for 6/12/18 months. Keep money in savings and earn a bit of interest. Pay off bill. Interest earned is additional discount from purchase price.



I bought a Sony Wega for $2000 and paid for it with a Sony Card. There were no payments and no interest accrued for 12 months. I put the $2000 in a 12 month CD at 2% interest. A year later I paid off the TV and had, effectively, an additional 2% off the purchase price.



I just bought a house and subsequently bought appliances at Sears. I paid for them on a Sears card with no payments or interest until next October. I have th money right no to pay for them, but this eases budgetary concerns with all the expenses I have over the next year. I will earmark the money to pay for that and let it sit in the bank until it's time to pay them off next year.



That's how it works well for me.



The danger is it enables a person to spend money he doesn't have, or to double spend his money.

 

[Ryan Wishton]

Dave,

I understand that.

What I am saying is those who wait till 2007 to begin making any payments.

Say, your billing starts Jan, 2007.

They wait till then Jan, 2007 to begin paying. Then they start making minimum payments with interest.

They at the same time think they got a good deal. Thats just what I dont understand?

 

[Kevin T]

well trying to understand human logic is an exercise in futility. just bang your head against a brick wall and everything will become clear.



kevin t

 

[CRyan]

Well, I guess there are people that do that. Does not make any sense at all. However, most same as cash deals do have mothly installments now.



I specifically use it so I can make monthly payments on an item so that it will be payed off at the time the deal ends. I get to borrow money for free in this case. It is like layaway without laying it away - You get the item now. Othwise you are hit with a huge interest charge. I figured this is what everyone did. However, my eyes have been openned lately where I realize people simply use it to horribly overbuy. Cannot imagine really - Would stress me out too much. I now have a friend who is still right now making the minimum monthly payment on a 450mhz Compaq PC at $37 a month. Ugh!

 

[DaveF]

quote:What I am saying is those who wait till 2007 to begin making any payments

I read too quickly and missed that part of it it.



It is rational, if not the best thing to do. If you're living on financing anyway, you might as well postpone payments for two years rather than start immediately. that assumes the financing is an equal or lower rate than you'd pay if you were making immediate payments. In think my Sears card has a 6 month term at 2.9% starting next October, when the first payments are due. If I wanted to finance it, that wouldn't be too bad.

 

[Citizen87645]

Also remember the number of credit accounts opened affects the credit rating. If a person does a lot of these plans to buy furniture, eletronics, etc. and if a new account is opened each time, the number of accounts is considered in the score and can negatively affect it if there are many accounts over a short period of time.

 

[Garrett Lundy]

How it reads : No Payments and NO Intrest for 24 Months!





Then: "Welcome to month 25, you now owe 100% of your original purchase. Since you have not made any payments, you are going to be charged an additional finance rate of 39.9%, compounded monthly for the last 24 months, you now owe us 312% of what you 'bought'. And if you don't pay it all off at once, we shall continue to compound said 39.9% finance charge, until we have all of our money. Here is some complimentary Astro*Glide, now drop trou' and bend over."

 

[Jeff Ulmer]

The Brick pulls this gimmick around here. No interest or payments for X months, but their credit price is 28% higher than their cash price. No interest? If you don't pay it off in full come the due date, additional interest is tacked on from the day of the sale.





If the deal allows you to pay it off in its entirety with no penalty, fine, but these deals almost always have a catch somewhere.