Would you pay more to pay by credit/loan?

patwa_2

Hi

I was just wondering what people's views were about the idea of differing payments to a later date when buying items.

We have a monitor, the lowest price available online if £489. We could however buy from a different company who offers 6 months interest-free credit and pay £562, or buy from the manufacturers and pay £620 and pay by installments.

I know at the end of the day one could rightly say that it's better to have the money now and pay less, but I was wondering if many people here take the credit/installment option even if it would cost more?

Let's assume we're talking about non-essential purchases or treat purchases. Personally, I would take the £562 and pay in 6 months. I know I'll earn more than the £80 difference in interest and it means that I have the item, can try it, and I know I'm not handing over any money at the present time. it just makes me feel better that should anything go wrong I can sort out a replacement/return now before I pay.

Thoughts, ideas and experiences?

RayWolfe

patwa wrote:

Hi
Personally, I would take the £562 and pay in 6 months. I know I'll earn more than the £80 difference in interest

No you won't. Nothing like it. Nearer £12 interest saving!

Debt_Free_Chick

patwa wrote:

Personally, I would take the £562 and pay in 6 months. I know I'll earn more than the £80 difference in interest

Really? Which account is giving that kind of interest?

thesaint

Even though you would have the item in your hand without paying, you would still have to pay them if you had a dispute. You couldn't just say "I haven't paid you anything yet".

If this was the case everyone would buy a sofa on 1 year interest free and simply change it every 11 months or so safe in the knowledge that they have not made a payment yet.

My basic maths tells me that you are getting 40% return on your savings.

patwa_2

Um, the interest I quoted is based on the account I have, the interest I receive on that account and the balance in the account.

40%, hmm interesting that. £12? Nope, I receive £83 a month in interest.

I see your point about the damages, but my original question stands. Would you pay more for a differed payment, or would you always pay less but pay up front?

chesky369

Patwa - tell us where you're investing; I want some of that.

Debt_Free_Chick

patwa wrote:

Um, the interest I quoted is based on the account I have, the interest I receive on that account and the balance in the account.

40%, hmm interesting that. £12? Nope, I receive £83 a month in interest.

The balance in the account is irrelevant. If you leave £562 in a savings account, assuming an interest rate of 5%, that £562 would have earned about £14 interest gross, or £11 net.

I see your point about the damages, but my original question stands. Would you pay more for a differed payment, or would you always pay less but pay up front?

No I wouldn't pay more. And I thought retailers were not allowed to charge a different price, depending on the payment method.

In any event, I'm after the best price for the chosen product. If the best price also offered 6 or 12 months interest free credit, then I might take that too.

thesaint

I would pay the product at the cheapest price, unless the money I am saving in the short term could earn me more elsewhere.

I once bought a Motorbike for £6k, I could've paid for it outright, but the dealer offered 0% for 18 months so I took it.

patwa_2

Ah ok. I think I understand the general concensus on the matter. In this case I'll take the credit option, as the savings will earn more elsewhere during the interest period.

Thanks.

Snow_Dog

I have £562 to spare, could you possibly let me know where I can earn £83 pcm in interest on it?

Come to think about it i'd be chuffed with that per annum.

dexters_mum_2

I'd be inclined not to go for the credit option myself.
I'd be slightly more concerned about tariff fees, such as late payments, bounced DD charges, settlement figures etc etc.

Personally I'd rather have the saving now, rather than the saving later.