Interest free loan

Jonah01
Jonah01 Posts: 267 Forumite
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in Mortgages & endowments
Hi,

Out to get a sofa today. It's about £900. They offer an interest free loan over 1 to 4 years.

I can pay for it without the loan but was wondering would a loan of such a small amount have a big impact when remortgaging or wanting to borrow more from my mortgage provider.

Other than the mortgage it would be the only finance on my account.

Thanks
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Comments

  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    If you are in the process of hemorrhaging, don't take out any further credit.

    If not, hopefully your affordability isn't on that much of a knife edge for it to matter.
  • Jonah01
    Jonah01 Posts: 267 Forumite
    First Anniversary First Post
    Thanks for your advice
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Jonah01 wrote: »
    Out to get a sofa today. It's about £900. They offer an interest free loan over 1 to 4 years.

    In essence not interest free. The interest being costed into the selling price of the product. Don't get sucked in. Put quality first. Even if it means financing the sofa through another source.
  • goodwithsaving
    goodwithsaving Posts: 1,311 Forumite
    First Anniversary Name Dropper First Post
    Jonah01 wrote: »
    Hi,

    Out to get a sofa today. It's about £900. They offer an interest free loan over 1 to 4 years.

    I can pay for it without the loan but was wondering would a loan of such a small amount have a big impact when remortgaging or wanting to borrow more from my mortgage provider.

    Other than the mortgage it would be the only finance on my account.

    Thanks


    If you can pay for something without a loan, why on Earth would you get a loan? I also don't understand finance for sofas, appliances etc but that's just me. Always pay for things outright where possible
  • Jonah01
    Jonah01 Posts: 267 Forumite
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    Why on earth wouldn't you?
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    Deleted_User wrote: »
    If you are in the process of hemorrhaging, don't take out any further credit.

    If not, hopefully your affordability isn't on that much of a knife edge for it to matter.


    For heavens sake zx81, he/you should dial 999 instead of asking/answering questions on a forum :D
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    Jonah01 wrote: »
    Why on earth wouldn't you?


    Thrugelmir's answer just told you.
    The interest has already been added to the cost of the item.
  • ACG
    ACG Posts: 23,726 Forumite
    First Anniversary Name Dropper First Post I've helped Parliament
    With loans, lenders usually take the monthly repayment in to account (rather than the balance). If affordability is a doddle, then it will not matter if you do 1 or 4 years.

    If affordability is tight, then it is probably better to do it over the longer period.

    The loan repayments may have an impact, but just as equally there may be no impact at all, it all depends on the details - which we do not have. Maybe have a play around on an affordability calculator with and without the loan.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Lotak
    Lotak Posts: 96 Forumite
    edited 18 January at 9:20PM
    Catsacor wrote: »
    Thrugelmir's answer just told you.
    The interest has already been added to the cost of the item.

    Am I missing something?
    Whether you pay up front or over 4 years, the net cash outflow is the same? They will charge you £900 today or £18.75 / month for 48 months?
    In that case, it's financially better to pay it over 48 months than upfront.
    Current Debt (excluding mortgage) - £7,020
    Reducing £450/ month.
  • csgohan4
    csgohan4 Posts: 10,587 Forumite
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    Lotak wrote: »
    Am I missing something?
    Whether you pay up front or over 4 years, the net cash outflow is the same? They will charge you £900 today or £18.75 / month for 48 months?
    In that case, it's financially better to pay it over 48 months than upfront.







    how do you think they can afford to give you a so called 'interest free' loan? They factored it into the price, plus it may affect affordability as it is debt from a lender's prospective
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
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