Installment buying is expensive

The slogan “buy now, pay later” naturally sounds very tempting. Yet it is often an expensive solution. It is much cheaper to save the necessary money yourself or to borrow it in another way.

Installment purchase very expensive
Installment purchase very expensive

More and more shops make it possible to buy something immediately and pay for it later. This way you can quickly enjoy a new kitchen, car, wardrobe or smart TV / beamer . Sometimes shops offer purchase or payment via a company card. You can withdraw the repaid amounts again. You will then continuously have extra spending space. Of course it sounds very attractive to go into this. Yet it is not a sensible solution.

Expensive loan
If you buy on installment, you will take out a very expensive loan. Many companies that offer this option apply the maximum permitted interest rate. Currently, this rate is no less than 15 percent. A 1000 US dollar smart TV that you pay off in four years will then be 30 percent more expensive.

Interest of zero percent
There are also providers who offer temporary purchases or installments at zero percent interest. This also seems beneficial, but it is not. Often the purchase price is then increased or closing costs are charged for the loan.

Saving or borrowing money is more sensible
So it is actually more sensible to save money for the purchase. However, if this is necessary or unavoidable, it is advisable to first check carefully what conditions are attached to buying or paying off. It is of course also an option to take out a personal loan or a revolving credit at a lower interest rate. Borrowing money from a regular money provider is still cheaper than buying or paying off.

Published August 17, 2014 at 5:53 PM by the editors .

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