Should I take advantage of “interest-free” credit when buying something? [duplicate] The 2019 Stack Overflow Developer Survey Results Are InShould I pay cash or prefer a 0% interest loan for home furnishings?Take new loan to pay off old one, what would you do in this scenario?Can I take advantage of lower interest rates while I'm stuck in a fixed-rate mortgage?How to get 0% financing for a car, with no credit score?Lowest Interest Options for Short-Term LoanBuying a property for 3 years and then sellingTackling an obscene amount of student loansStudent loan tips for repayment, consolidation for a pharmacy graduateUsing 0% APR credit card(s) to pay off loans to avoid interestUK: National Insurance on employee loans when there is no interest benefitLump sum vs interest free loan
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Should I take advantage of “interest-free” credit when buying something? [duplicate]
The 2019 Stack Overflow Developer Survey Results Are InShould I pay cash or prefer a 0% interest loan for home furnishings?Take new loan to pay off old one, what would you do in this scenario?Can I take advantage of lower interest rates while I'm stuck in a fixed-rate mortgage?How to get 0% financing for a car, with no credit score?Lowest Interest Options for Short-Term LoanBuying a property for 3 years and then sellingTackling an obscene amount of student loansStudent loan tips for repayment, consolidation for a pharmacy graduateUsing 0% APR credit card(s) to pay off loans to avoid interestUK: National Insurance on employee loans when there is no interest benefitLump sum vs interest free loan
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This question already has an answer here:
Should I pay cash or prefer a 0% interest loan for home furnishings?
9 answers
If I buy something like a smartphone or a new PC, when you have these choice:
- Pay all the cost at the moment.
- Pay it in 6/12/18 months (with loan but without any interest rate and any extra cost).
What is the best option and why?
I know that the problem depends on the money that you have but for normal people (not poor, not rich), normal salary, and normal expenses:
What is the best way?
loans credit interest-rate payment learning
edited 2 days ago
Bob Baerker
18.5k22754
asked 2 days ago
GaweyGawey
1284
New contributor
Gawey is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
marked as duplicate by Ben Miller, JoeTaxpayer♦ 2 days ago
This question has been asked before and already has an answer. If those answers do not fully address your question, please ask a new question.
add a comment |
This question already has an answer here:
Should I pay cash or prefer a 0% interest loan for home furnishings?
9 answers
If I buy something like a smartphone or a new PC, when you have these choice:
- Pay all the cost at the moment.
- Pay it in 6/12/18 months (with loan but without any interest rate and any extra cost).
What is the best option and why?
I know that the problem depends on the money that you have but for normal people (not poor, not rich), normal salary, and normal expenses:
What is the best way?
loans credit interest-rate payment learning
edited 2 days ago
Bob Baerker
18.5k22754
asked 2 days ago
GaweyGawey
1284
New contributor
Gawey is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
marked as duplicate by Ben Miller, JoeTaxpayer♦ 2 days ago
This question has been asked before and already has an answer. If those answers do not fully address your question, please ask a new question.
add a comment |
This question already has an answer here:
Should I pay cash or prefer a 0% interest loan for home furnishings?
9 answers
If I buy something like a smartphone or a new PC, when you have these choice:
- Pay all the cost at the moment.
- Pay it in 6/12/18 months (with loan but without any interest rate and any extra cost).
What is the best option and why?
I know that the problem depends on the money that you have but for normal people (not poor, not rich), normal salary, and normal expenses:
What is the best way?
loans credit interest-rate payment learning
edited 2 days ago
Bob Baerker
18.5k22754
asked 2 days ago
GaweyGawey
1284
New contributor
Gawey is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
This question already has an answer here:
Should I pay cash or prefer a 0% interest loan for home furnishings?
9 answers
If I buy something like a smartphone or a new PC, when you have these choice:
- Pay all the cost at the moment.
- Pay it in 6/12/18 months (with loan but without any interest rate and any extra cost).
What is the best option and why?
I know that the problem depends on the money that you have but for normal people (not poor, not rich), normal salary, and normal expenses:
What is the best way?
This question already has an answer here:
Should I pay cash or prefer a 0% interest loan for home furnishings?
9 answers
loans credit interest-rate payment learning
loans credit interest-rate payment learning
edited 2 days ago
Bob Baerker
18.5k22754
asked 2 days ago
GaweyGawey
1284
New contributor
Gawey is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
edited 2 days ago
Bob Baerker
18.5k22754
asked 2 days ago
GaweyGawey
1284
New contributor
Gawey is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
edited 2 days ago
Bob Baerker
18.5k22754
edited 2 days ago
Bob Baerker
18.5k22754
edited 2 days ago
Bob Baerker
18.5k22754
18.5k22754
asked 2 days ago
GaweyGawey
1284
New contributor
Gawey is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 2 days ago
GaweyGawey
1284
asked 2 days ago
GaweyGawey
1284
1284
New contributor
Gawey is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
New contributor
Gawey is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
Gawey is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
marked as duplicate by Ben Miller, JoeTaxpayer♦ 2 days ago
This question has been asked before and already has an answer. If those answers do not fully address your question, please ask a new question.
marked as duplicate by Ben Miller, JoeTaxpayer♦ 2 days ago
This question has been asked before and already has an answer. If those answers do not fully address your question, please ask a new question.
add a comment |
add a comment |
1 Answer
1
active
oldest
votes
That question comes down to two main factors:
1 Earning potential aka PRO "have it now pay later"
So if you can have the phone/laptop/whatever now and pay it later, that means you'll have money 6/12/18 months longer than you'd have it if you would pay it right now. So your money can potentially earn you interest in that time and that very much depends on the interest rate situation. If you get like 2% on your 1000 Bucks your paying for your phone or laptop you'll get 20 bucks of the purchase price if you do it that way. Another aspect is that your laptop may be your working instrument and will enable you to do work you otherwise couldn't do. In that case the laptop is an investment into your future earning potential.
2 Future Discount aka CONTRA "have it now pay later"
You know that Simpsons scene where homer downs a bottle of vodka mixed with a entire jar of mayonnaise and says :"That's a problem for future homer. Man I sure don't want to be that guy!"
Yeah.. that's what paying later means. Paying in the future will make your price sensitivity decrease because "It's a problem for future me". That means you are much more likely to over spend. By the way that is also the reason why stores offer financing options like this. You think it is interest rate free, which is true. But the price you are willing to pay if you not need to pay until in a year drastically increases. Therefor if you buy stuff for fun and not with the intention to generate money with it, pay it now. If you generate money with it, it's okay to pay later.
edited 2 days ago
yoozer8
2,27841123
answered 2 days ago
Lucas Raphael PianegondaLucas Raphael Pianegonda
868312
4
+1. But the contra-point is really just psychology. If you have already decided you want to make this purchase for the advertised price and now are just asking yourself whether to pay now or pay in instalments, then this point is pretty moot. It is really just relevant if you came to the conclusion "I would not consider to buy this if I would have to pay everything now, but I might consider it if I could pay it in instalments".
– Philipp
2 days ago
2
@Philipp That is pure psychology true! Nevertheless it needs a lot of self discipline to rationally assess these issues. Therefor I would, as you suggest, not recommend buying something on rates if you wouldn't also pay the same price right now.
– Lucas Raphael Pianegonda
2 days ago
@LucasRaphaelPianegonda Either a lot of self discipline or a clean bookkeeping scheme.
– glglgl
2 days ago
2
Paying over time into the future instead of immediately also means that you now still have the full (or nearly full, if you make the first payment up front) purchase price in hand and ready to spend. You may be more likely to buy things you otherwise wouldn't have with this "extra" cash (especially if the person selling you this item offers you a "great deal" on related items).
– yoozer8
2 days ago
5
The biggest problem with these in my opinion is the risk of missed payments. If you read the contract, you will often see that the loan DOES accrue interest all of the time, but there is a provision that if you make all of the payments on time and pay it off before the end then the interest will not be applied. BUT, if you pay late just once, all of that previously accrued interest (at a high rate) will suddenly show up in your balance and it will continue to compound until you pay it off! That's what these companies are banking on.
– Justin
2 days ago
add a comment |
1 Answer
1
active
oldest
votes
1 Answer
1
active
oldest
votes
active
oldest
votes
active
oldest
votes
That question comes down to two main factors:
1 Earning potential aka PRO "have it now pay later"
So if you can have the phone/laptop/whatever now and pay it later, that means you'll have money 6/12/18 months longer than you'd have it if you would pay it right now. So your money can potentially earn you interest in that time and that very much depends on the interest rate situation. If you get like 2% on your 1000 Bucks your paying for your phone or laptop you'll get 20 bucks of the purchase price if you do it that way. Another aspect is that your laptop may be your working instrument and will enable you to do work you otherwise couldn't do. In that case the laptop is an investment into your future earning potential.
2 Future Discount aka CONTRA "have it now pay later"
You know that Simpsons scene where homer downs a bottle of vodka mixed with a entire jar of mayonnaise and says :"That's a problem for future homer. Man I sure don't want to be that guy!"
Yeah.. that's what paying later means. Paying in the future will make your price sensitivity decrease because "It's a problem for future me". That means you are much more likely to over spend. By the way that is also the reason why stores offer financing options like this. You think it is interest rate free, which is true. But the price you are willing to pay if you not need to pay until in a year drastically increases. Therefor if you buy stuff for fun and not with the intention to generate money with it, pay it now. If you generate money with it, it's okay to pay later.
edited 2 days ago
yoozer8
2,27841123
answered 2 days ago
Lucas Raphael PianegondaLucas Raphael Pianegonda
868312
4
+1. But the contra-point is really just psychology. If you have already decided you want to make this purchase for the advertised price and now are just asking yourself whether to pay now or pay in instalments, then this point is pretty moot. It is really just relevant if you came to the conclusion "I would not consider to buy this if I would have to pay everything now, but I might consider it if I could pay it in instalments".
– Philipp
2 days ago
2
@Philipp That is pure psychology true! Nevertheless it needs a lot of self discipline to rationally assess these issues. Therefor I would, as you suggest, not recommend buying something on rates if you wouldn't also pay the same price right now.
– Lucas Raphael Pianegonda
2 days ago
@LucasRaphaelPianegonda Either a lot of self discipline or a clean bookkeeping scheme.
– glglgl
2 days ago
2
Paying over time into the future instead of immediately also means that you now still have the full (or nearly full, if you make the first payment up front) purchase price in hand and ready to spend. You may be more likely to buy things you otherwise wouldn't have with this "extra" cash (especially if the person selling you this item offers you a "great deal" on related items).
– yoozer8
2 days ago
5
The biggest problem with these in my opinion is the risk of missed payments. If you read the contract, you will often see that the loan DOES accrue interest all of the time, but there is a provision that if you make all of the payments on time and pay it off before the end then the interest will not be applied. BUT, if you pay late just once, all of that previously accrued interest (at a high rate) will suddenly show up in your balance and it will continue to compound until you pay it off! That's what these companies are banking on.
– Justin
2 days ago
add a comment |
That question comes down to two main factors:
1 Earning potential aka PRO "have it now pay later"
So if you can have the phone/laptop/whatever now and pay it later, that means you'll have money 6/12/18 months longer than you'd have it if you would pay it right now. So your money can potentially earn you interest in that time and that very much depends on the interest rate situation. If you get like 2% on your 1000 Bucks your paying for your phone or laptop you'll get 20 bucks of the purchase price if you do it that way. Another aspect is that your laptop may be your working instrument and will enable you to do work you otherwise couldn't do. In that case the laptop is an investment into your future earning potential.
2 Future Discount aka CONTRA "have it now pay later"
You know that Simpsons scene where homer downs a bottle of vodka mixed with a entire jar of mayonnaise and says :"That's a problem for future homer. Man I sure don't want to be that guy!"
Yeah.. that's what paying later means. Paying in the future will make your price sensitivity decrease because "It's a problem for future me". That means you are much more likely to over spend. By the way that is also the reason why stores offer financing options like this. You think it is interest rate free, which is true. But the price you are willing to pay if you not need to pay until in a year drastically increases. Therefor if you buy stuff for fun and not with the intention to generate money with it, pay it now. If you generate money with it, it's okay to pay later.
edited 2 days ago
yoozer8
2,27841123
answered 2 days ago
Lucas Raphael PianegondaLucas Raphael Pianegonda
868312
4
+1. But the contra-point is really just psychology. If you have already decided you want to make this purchase for the advertised price and now are just asking yourself whether to pay now or pay in instalments, then this point is pretty moot. It is really just relevant if you came to the conclusion "I would not consider to buy this if I would have to pay everything now, but I might consider it if I could pay it in instalments".
– Philipp
2 days ago
2
@Philipp That is pure psychology true! Nevertheless it needs a lot of self discipline to rationally assess these issues. Therefor I would, as you suggest, not recommend buying something on rates if you wouldn't also pay the same price right now.
– Lucas Raphael Pianegonda
2 days ago
@LucasRaphaelPianegonda Either a lot of self discipline or a clean bookkeeping scheme.
– glglgl
2 days ago
2
Paying over time into the future instead of immediately also means that you now still have the full (or nearly full, if you make the first payment up front) purchase price in hand and ready to spend. You may be more likely to buy things you otherwise wouldn't have with this "extra" cash (especially if the person selling you this item offers you a "great deal" on related items).
– yoozer8
2 days ago
5
The biggest problem with these in my opinion is the risk of missed payments. If you read the contract, you will often see that the loan DOES accrue interest all of the time, but there is a provision that if you make all of the payments on time and pay it off before the end then the interest will not be applied. BUT, if you pay late just once, all of that previously accrued interest (at a high rate) will suddenly show up in your balance and it will continue to compound until you pay it off! That's what these companies are banking on.
– Justin
2 days ago
add a comment |
That question comes down to two main factors:
1 Earning potential aka PRO "have it now pay later"
So if you can have the phone/laptop/whatever now and pay it later, that means you'll have money 6/12/18 months longer than you'd have it if you would pay it right now. So your money can potentially earn you interest in that time and that very much depends on the interest rate situation. If you get like 2% on your 1000 Bucks your paying for your phone or laptop you'll get 20 bucks of the purchase price if you do it that way. Another aspect is that your laptop may be your working instrument and will enable you to do work you otherwise couldn't do. In that case the laptop is an investment into your future earning potential.
2 Future Discount aka CONTRA "have it now pay later"
You know that Simpsons scene where homer downs a bottle of vodka mixed with a entire jar of mayonnaise and says :"That's a problem for future homer. Man I sure don't want to be that guy!"
Yeah.. that's what paying later means. Paying in the future will make your price sensitivity decrease because "It's a problem for future me". That means you are much more likely to over spend. By the way that is also the reason why stores offer financing options like this. You think it is interest rate free, which is true. But the price you are willing to pay if you not need to pay until in a year drastically increases. Therefor if you buy stuff for fun and not with the intention to generate money with it, pay it now. If you generate money with it, it's okay to pay later.
edited 2 days ago
yoozer8
2,27841123
answered 2 days ago
Lucas Raphael PianegondaLucas Raphael Pianegonda
868312
That question comes down to two main factors:
1 Earning potential aka PRO "have it now pay later"
So if you can have the phone/laptop/whatever now and pay it later, that means you'll have money 6/12/18 months longer than you'd have it if you would pay it right now. So your money can potentially earn you interest in that time and that very much depends on the interest rate situation. If you get like 2% on your 1000 Bucks your paying for your phone or laptop you'll get 20 bucks of the purchase price if you do it that way. Another aspect is that your laptop may be your working instrument and will enable you to do work you otherwise couldn't do. In that case the laptop is an investment into your future earning potential.
2 Future Discount aka CONTRA "have it now pay later"
You know that Simpsons scene where homer downs a bottle of vodka mixed with a entire jar of mayonnaise and says :"That's a problem for future homer. Man I sure don't want to be that guy!"
Yeah.. that's what paying later means. Paying in the future will make your price sensitivity decrease because "It's a problem for future me". That means you are much more likely to over spend. By the way that is also the reason why stores offer financing options like this. You think it is interest rate free, which is true. But the price you are willing to pay if you not need to pay until in a year drastically increases. Therefor if you buy stuff for fun and not with the intention to generate money with it, pay it now. If you generate money with it, it's okay to pay later.
edited 2 days ago
yoozer8
2,27841123
answered 2 days ago
Lucas Raphael PianegondaLucas Raphael Pianegonda
868312
edited 2 days ago
yoozer8
2,27841123
edited 2 days ago
yoozer8
2,27841123
edited 2 days ago
yoozer8
2,27841123
2,27841123
answered 2 days ago
Lucas Raphael PianegondaLucas Raphael Pianegonda
868312
answered 2 days ago
Lucas Raphael PianegondaLucas Raphael Pianegonda
868312
answered 2 days ago
Lucas Raphael PianegondaLucas Raphael Pianegonda
868312
868312
4
+1. But the contra-point is really just psychology. If you have already decided you want to make this purchase for the advertised price and now are just asking yourself whether to pay now or pay in instalments, then this point is pretty moot. It is really just relevant if you came to the conclusion "I would not consider to buy this if I would have to pay everything now, but I might consider it if I could pay it in instalments".
– Philipp
2 days ago
2
@Philipp That is pure psychology true! Nevertheless it needs a lot of self discipline to rationally assess these issues. Therefor I would, as you suggest, not recommend buying something on rates if you wouldn't also pay the same price right now.
– Lucas Raphael Pianegonda
2 days ago
@LucasRaphaelPianegonda Either a lot of self discipline or a clean bookkeeping scheme.
– glglgl
2 days ago
2
Paying over time into the future instead of immediately also means that you now still have the full (or nearly full, if you make the first payment up front) purchase price in hand and ready to spend. You may be more likely to buy things you otherwise wouldn't have with this "extra" cash (especially if the person selling you this item offers you a "great deal" on related items).
– yoozer8
2 days ago
5
The biggest problem with these in my opinion is the risk of missed payments. If you read the contract, you will often see that the loan DOES accrue interest all of the time, but there is a provision that if you make all of the payments on time and pay it off before the end then the interest will not be applied. BUT, if you pay late just once, all of that previously accrued interest (at a high rate) will suddenly show up in your balance and it will continue to compound until you pay it off! That's what these companies are banking on.
– Justin
2 days ago
add a comment |
4
+1. But the contra-point is really just psychology. If you have already decided you want to make this purchase for the advertised price and now are just asking yourself whether to pay now or pay in instalments, then this point is pretty moot. It is really just relevant if you came to the conclusion "I would not consider to buy this if I would have to pay everything now, but I might consider it if I could pay it in instalments".
– Philipp
2 days ago
2
@Philipp That is pure psychology true! Nevertheless it needs a lot of self discipline to rationally assess these issues. Therefor I would, as you suggest, not recommend buying something on rates if you wouldn't also pay the same price right now.
– Lucas Raphael Pianegonda
2 days ago
@LucasRaphaelPianegonda Either a lot of self discipline or a clean bookkeeping scheme.
– glglgl
2 days ago
2
Paying over time into the future instead of immediately also means that you now still have the full (or nearly full, if you make the first payment up front) purchase price in hand and ready to spend. You may be more likely to buy things you otherwise wouldn't have with this "extra" cash (especially if the person selling you this item offers you a "great deal" on related items).
– yoozer8
2 days ago
5
The biggest problem with these in my opinion is the risk of missed payments. If you read the contract, you will often see that the loan DOES accrue interest all of the time, but there is a provision that if you make all of the payments on time and pay it off before the end then the interest will not be applied. BUT, if you pay late just once, all of that previously accrued interest (at a high rate) will suddenly show up in your balance and it will continue to compound until you pay it off! That's what these companies are banking on.
– Justin
2 days ago
4
4
+1. But the contra-point is really just psychology. If you have already decided you want to make this purchase for the advertised price and now are just asking yourself whether to pay now or pay in instalments, then this point is pretty moot. It is really just relevant if you came to the conclusion "I would not consider to buy this if I would have to pay everything now, but I might consider it if I could pay it in instalments".
– Philipp
2 days ago
+1. But the contra-point is really just psychology. If you have already decided you want to make this purchase for the advertised price and now are just asking yourself whether to pay now or pay in instalments, then this point is pretty moot. It is really just relevant if you came to the conclusion "I would not consider to buy this if I would have to pay everything now, but I might consider it if I could pay it in instalments".
– Philipp
2 days ago
2
2
@Philipp That is pure psychology true! Nevertheless it needs a lot of self discipline to rationally assess these issues. Therefor I would, as you suggest, not recommend buying something on rates if you wouldn't also pay the same price right now.
– Lucas Raphael Pianegonda
2 days ago
@Philipp That is pure psychology true! Nevertheless it needs a lot of self discipline to rationally assess these issues. Therefor I would, as you suggest, not recommend buying something on rates if you wouldn't also pay the same price right now.
– Lucas Raphael Pianegonda
2 days ago
@LucasRaphaelPianegonda Either a lot of self discipline or a clean bookkeeping scheme.
– glglgl
2 days ago
@LucasRaphaelPianegonda Either a lot of self discipline or a clean bookkeeping scheme.
– glglgl
2 days ago
2
2
Paying over time into the future instead of immediately also means that you now still have the full (or nearly full, if you make the first payment up front) purchase price in hand and ready to spend. You may be more likely to buy things you otherwise wouldn't have with this "extra" cash (especially if the person selling you this item offers you a "great deal" on related items).
– yoozer8
2 days ago
Paying over time into the future instead of immediately also means that you now still have the full (or nearly full, if you make the first payment up front) purchase price in hand and ready to spend. You may be more likely to buy things you otherwise wouldn't have with this "extra" cash (especially if the person selling you this item offers you a "great deal" on related items).
– yoozer8
2 days ago
5
5
The biggest problem with these in my opinion is the risk of missed payments. If you read the contract, you will often see that the loan DOES accrue interest all of the time, but there is a provision that if you make all of the payments on time and pay it off before the end then the interest will not be applied. BUT, if you pay late just once, all of that previously accrued interest (at a high rate) will suddenly show up in your balance and it will continue to compound until you pay it off! That's what these companies are banking on.
– Justin
2 days ago
The biggest problem with these in my opinion is the risk of missed payments. If you read the contract, you will often see that the loan DOES accrue interest all of the time, but there is a provision that if you make all of the payments on time and pay it off before the end then the interest will not be applied. BUT, if you pay late just once, all of that previously accrued interest (at a high rate) will suddenly show up in your balance and it will continue to compound until you pay it off! That's what these companies are banking on.
– Justin
2 days ago
add a comment |
