cookstar

iTrader: (6)

Had a look at a few sofa's yesterday, found one we liked which came to about £2k, now the shop is offering a interest free deal for four years, making the payments peanuts. I asked if there was any discounts available if paying with cash etc and there isn't.

I'm considering taking them up on the deal, as I would rather have the money in my bank earning (albeit) a small amount of interest.

Do you use these offers when buying items, or would you rather not have the annoyance of another DD coming out of your account every month.

cookstar

iTrader: (6)

See now that would be annoying for me, if I do it I would like to be paying straight away.

EddScott

I do from time to time. If I haven't got the money right now but I know I will in a few months I'll use pay later deals. Never ever let it go into interest paying because its a complete rip at 26-30% or whatever they charge.

boxst

I have done mainly because it annoys me I can't get a discount for paying it all upfront.

Steve

cookstar

iTrader: (6)

I have often wondered how the finance companies make their money, I take it this is how then.

Ant

And it's interest added on through all the 4 year term

EddScott

I would imagine so. You take out a 3/6/12 buy now pay later deal with all the intentions to pay it off. Apathy or lack of finances means that at the end of the period the interest kicks in from day 1.

The item is worth 1000. Your payments after the special period are £50 for 2 years. Even if you forget and let a few payments go before paying the balance, the finance company makes its money.

Plus some finance companies aren't silly and want arrangement fees. I was looking at something the other day, can't remember what it was now, but the finance deal didn't sound too bad. The arrangement fee was a % of the item cost and because I had no intention of letting it go into interest payments it would have been cheaper to just buy it there and then.

Like these catalogues - what a joke. You pay top retail price and pay over 52 weeks and some simply criminal interest rate? No wonder child benefit money gets spent on a pair of diesel jeans

No joke this - one of our neighbours (very "richer than yow" she was) used to use Provident loans. At some point this clunge of a woman convinced my gf to take out a loan (so she got some of hers) and I don't know what the rate was but on £200 I think it ended up costing £400?? - stupid piddly amounts and 100%+ interest rates. That was almost a deal breaker for the silly mare. I only found out because the arrangement was that the guy would visit the neighour and my gf would give her the money. My gf didn't give her the money in time so she didn't hesitate to send the collector round to ours. I got so angry because I didn't know what was going on and the guy wouldn't tell me I completely lost it.

Its odd that low income people/families get charged the highest rates. Doesn't make sense.

ChrisB

It does. In theory, they are the biggest risk to lend money to, so the lender wants the best reward for taking the risk.

rossyboy

iTrader: (8)

They make a lot of sense when inflation and interest rates are higher.

Pay sofa off over 4 years interest free instead of paying £2k now and losing the interest that it could have made in the bank over that period.

Say rates at 5% = £431 interest over 4 years

Also helps your credit rating if you just keep making the payments.

wasbakerman

If you can't get a better deal for paying all now then take the deal - you are unlikely to though as the Finance company will offer a commission to the company if you take the finance. Just make sure you settle as and when they require you too otherwise that is when they make the money as the interest rate will rise significantly.

Nothing wrong with free credit, particularly if it enables you to gain interest on the lump you have left i.e. £250/month into one of the 5% bank accounts all the high street banks did recently (do they still do them?) or into a 12 month fixed interest bond which are currently >3%.

Never understand why people shy away from these kind of deals (or credit card deals) providing they are sensible enough to keep a track on their money/liability.

TelBoy

It's always a good idea until about 5 months in and you're used to whatever item it is you originally bought, then those monthly payments irk. On that basis i wouldn't do it interest free unless i was desperate.

cookstar

iTrader: (6)

That was a concern of mine as well, we bought a sofa last Christmas, had it delivered March, already looking to change it.

ScoobyDoo555

The best one I did as for a £150-odd bed for my daughter

The salesman was a tw@t anyway (I actually had the cash in my pocket) - he said something to wind me up (typical salesman blurb), so I asked to take advantage of the 0% interest option over 12 months.

He was NOT chuffed at doing the paperwork for £150!!LOL!!

Particularly as I signed paperwork, we got the cash out, counting it in the store!!LOL!!

Besides, always helps to keep the credit rating good


Dan

Deep Singh

In principle its better to have the money in your pocket rather than somebody elses. Even more important if you are a small businessman and cash flow is everything.

I have a pyschological problem with it though, I think it can encourage you to spend more than you should.

If I paid £xk for something in full I would feel a little poor for the next few months and therefore not spend any more. If I was only paying a few quid a month its different.

Tbh, I'm disciplined enough now not to do that, but its a principle I developed after I had ahem spending issues in my 20s

GarethE

iTrader: (1)

I've just paid the balance on a camera that I took on 12 months interest free last August. It saved me having to fork out £2500 at the time, and had the camera free for a year and used my tax rebate to pay off the amount. It didn't matter whether I paid a small amount every month or absolutely nothing for 12 months so long its paid off by the due date. Of course some Interest Free credit options require you to make monthly DD payments, if you can live with those small payments coming out then fair enough.

In the case of the camera purchase the most important thing, as mentioned, is to ensure that you pay off the FULL amount before the direct debits kick in as the APR rate is usually high, and the interest on the full amount for the whole period of the credit. If I hadn't paid off the camera now the total amount owing on it when the DD start would have been around £4500

The still get you by charging you a £29.99 early settlement fee though !

My belief is if you have the cash then buy it outright, as you never know what may happen in the next 12/24months and what your financial position would be at the time.

Gareth

jods

Yes - the above is correct. Watch them like a HAWK. We have a 4 year deal that finishes this month - the sneaky fekkers had been taking direct debits every month of £50. This month they took £49.80 leaving a balance of 20p. If we hadn't spotted it and paid it off they would have charged us interest on the WHOLE amount at 29%.

Tw@'s

Deep Singh

Are you being serious? That's criminal!

rossyboy

iTrader: (8)

Until recently I was still paying off a sofa that I sold with a flat over a year ago

Just didnt make any sense to pay it off early with it being interest free.

The payments did annoy me though I must admit.

jods

Straight up DS.

It was Black Horse

TelBoy

Did you ever contact them, or any regulator? That's got to be one of the worst scams i've ever heard about, and i assume it's "normal business practice" for them? Scandalous.

Jamescsti

I bought a bed in January for about £800, had the cash to pay but I bought it "buy now pay in 6 months" just so I was covered if the company went bust before the bed was delivered, I paid the balance in full as soon I as I had the bed, sometimes they are worth using for that alone.

I hate having loads of direct debits coming out so normally I wouldn't bother