Comments on: Credit Financing and Deferred Billing – Kate Answered

By: Paypal Buyer Credit for eBay Buyers

Paypal Buyer Credit for eBay Buyers — Tue, 18 May 2010 03:59:45 +0000

[...] you choose to offer promotional financing (e.g., no payments for six months), PayPal charges you, the seller, a percentage of the financed [...]

By: » Interest Free Financing and Cash Discounts @ fivecentnickel.com

» Interest Free Financing and Cash Discounts @ fivecentnickel.com — Thu, 11 Feb 2010 13:17:25 +0000

[...] local furniture store. I jumped at their offer of free money and, despite being new to the world of promotional credit financing, I successfully paid the couch off before the interest free period ended. I thus avoided any [...]

By: Matt Jabs

Matt Jabs — Sun, 17 Jan 2010 01:36:05 +0000

Awesome Clayton: My wife and I did this with all our siblings “baby stuff.” They are all done having children, and we have not yet started. We took everything we wanted/needed off their hands for free and now do not have to buy much of anything if the Lord chooses to bless us w/a little Jabs.

By: Clayton

Clayton — Sun, 17 Jan 2010 01:28:22 +0000

When my wife and I are looking for something, we just tell everybody we know that we are in the market for something. We start this about 3 months before we seriously go shopping for something. We ended up getting 95% of our living room furniture in excellent condition for free from family who was moving. Even if it isn’t the best color, refinishing a couch or table is much cheaper than buying it new, and you can add your own special touch.

By: ASB Chicago Estate Sales

ASB Chicago Estate Sales — Sat, 16 Jan 2010 00:57:03 +0000

Your right Matt. Estate sales are great places to find exceptional buys for furnishings and household items. And top quality too at less than new junk. We conduct in the Chicago area and still marvel at the quality items out there, and at a fraction of the cost. BYW, most of our customers are high earning professionals yet that’s where they come to shop. They’re savvy buyers, good with their money, look for real bargains, and know where to find them. Even new/er items can be found at estate sales.

By: Matt Jabs

Matt Jabs — Sat, 16 Jan 2010 00:39:31 +0000

Wow Olivia! I’m calling you next time I need to buy any furniture!

Great job.

By: Matt Jabs

Matt Jabs — Sat, 16 Jan 2010 00:34:16 +0000

“Check the craigslist entries near expensive zip codes — you will find great stuff that the owners are just trying to dump to make room for their more expensive stuff.” (BG quoted)

This is GREAT advice Kate… you should definitely take it.

Instead of financing new furniture, make it your mission to find the nicest stuff for the best price… actually it sounds like fun to me!

By: Olivia

Olivia — Fri, 15 Jan 2010 22:40:13 +0000

Thrift stores can, but try other places too as dealers tend to get the prime stuff. We’ve gotten most of our furnture used over a period of time. But then again I really like older stuff. It has character. Our comfortable sofa was a discard from an older friend’s mother which we refurbished and recovered. (It’s now about 100 and has a grace not found in newer pieces.) Our bedroom set belonged to my grandparents, Dining room table from an auction. Chairs from a second hand store. Hutch (that “just so happened” to match the table veneers perfectly) from an antique place. This one gave a 10% discount when we paid cash. So you may want to ask. Various lamps from various places. Yard sales, etc. A friend gave us an old Victrola cabinet he trashpicked. (Totally cool. After a rub down with Old English furniture polish, it looks great.) Not to say we haven’t purchased some things new, but we like to save up the cash, keep our eyes peeled for bargains, and pounce. What’s nice is if you get things you really like, they all seem to hang together. Have fun hunting.

By: BG

BG — Fri, 15 Jan 2010 22:33:58 +0000

Kate) Craigslist and even Goodwill are great places to find used furniture — especially Goodwill near _affluent_ neighborhoods.

We have a neighbor that just donated a slightly-used 1-year old leather couch to goodwill.

Check the craigslist entries near expensive zip codes — you will find great stuff that the owners are just trying to dump to make room for their more expensive stuff.

By: Kate

Kate — Fri, 15 Jan 2010 18:29:40 +0000

Maybe I will just look for something used. I hear thrift stores can have some great stuff during this time of year.

By: Ann

Ann — Fri, 15 Jan 2010 18:18:31 +0000

We bought living room furniture this way some years ago. We paid it off within the time allocated and did not have to pay any interest, but I would not do it this way again, knowing what I know now about finances, saving & debt. I would first try finding something used & then if nothing else, save first & then make a purchase.

By: BG

BG — Fri, 15 Jan 2010 17:38:06 +0000

Good advice Matt. The trick with these types of loans is that they are really stacked against you. You screw up once, even a little bit, and you could immediately see hundreds of dollars tacked onto the next statement.

I would avoid any and all loans that would retroactively apply interest starting at day zero, just because you were a day late on your 20th monthly payment — or even worse, a day late with a different loan altogether, hence dinging your credit score and causing a universal default on the department store loan.

Best advice is to just save up and pay cash. There are many horror stories on the internet about people getting royally screwed by this type of financing, when they original though it was a great deal.

Rooms-to-go knows about the Credit Protection act that is going into affect soon that makes these types of loans illegal — hence why they are in a campaign to get as many suckers signed up as possible.

By: Matt Jabs

Matt Jabs — Fri, 15 Jan 2010 17:12:55 +0000

Interesting Kayro… it is great that you had the wherewithal to call and get a re-rate. Some folks may have just swept it under the rug.

By: kayro

kayro — Fri, 15 Jan 2010 16:39:06 +0000

We bought an LCD TV from Ultimate Electronics on a 2-year no interest deal (no payments required), and a bed from the Roomstore (1 year, minimal monthly payment required).

It’s important to note that it is not the “store” you have credit with. Credit is actually extended by banks, in these cases HSBC and Wells Fargo, respectively. Despite this, these loans are considered “retail loans” and not bank loans.

One huge drawback I found out later was the negative way “retail credit” affected my auto insurance rate. My insurer (USAA) changed to rating people based on financial information. Just before I paid off these loans, the insurer’s third party rated our credit. My renewal ended up being nearly 25% higher than the year before, mainly because of these retail accounts. Note that they didn’t care IF I had an account — I was dinged because I had outstanding balance.

As it happened, they drew my financial information just before I paid off both accounts (which was a couple of months before I got the renewal information). I was really angry at the rate increase (no tickets, no accidents in over a decade but overnight I’m suddenly 25% riskier?!! Don’t get me started on THAT!)

Anyway — I obtained the rating information I was entitled to and read it carefully. I saw that I had been dinged because I had a balance on the retail accounts, so I asked the insurer to re-rate me. The rep told me that she had never seen the rate drop as much as it did on my re-rate. The renewal was still increased (ever known your auto rate to decrease? Yeah, me neither), but the increase was now much more reasonable.

The retail credit was helpful at the time — allowing us to get a TV when our current one died unexpectedly, and a bed when my husband was having back pain and needed a replacement immediately — but it has some negative financial impact that people should be aware of. (Note that not all auto insurers rate using financial data although this is increasing.)

By: Peter

Peter — Fri, 15 Jan 2010 16:32:43 +0000

Whenever you take on a financing deal like this you’re also taking on risk. Risk that you won’t lose your job, risk that you won’t forget to make payments when they start, etc. Personally I come down firmly in the camp that says, if you need to finance it, you probably shouldn’t be buying it (except for a house).

Buy used or save up and pay cash!

By: Kate

Kate — Fri, 15 Jan 2010 16:26:15 +0000

Thanks for this article! Two weeks ago I did purchase some new bedroom furniture and paid cash. It was nice to know that I did not have any future payments to look forward to on the furniture. While I do have enough money in savings to purchase some furniture for the dining room, I thought it would be nice to have the money continue to earn interest while I could make payments on the zero % financing.

I will check back to see all of the comments as they trickle in today.

Thanks!

Kate

By: Matt Jabs

Matt Jabs — Fri, 15 Jan 2010 16:03:35 +0000

If it were me, I would do what I suggested in the latter part of the article… seek out used deals and try to save a bundle and pay cash.

By: donna

donna — Fri, 15 Jan 2010 14:58:41 +0000

I have used this method numerous times, of course it takes discipline (and a paycheck) but i would figure out how many paydays till the balance came due and divide the total by the # of pdays, and that is what i HAD TO, pay towards the purchase period. Normally i would go no lower than 12 months for large purchases, but paid off $3,000 of flooring in 12 months no interest.
I just depends on how disciplined you are sometimes?

By: gn

gn — Fri, 15 Jan 2010 14:42:29 +0000

Don’t buy new electronics, furniture, exercise equipment, etc until you’ve spent at least 2-3 months getting a sense for what you can score “used” for a fraction of the cost. Incredible what you can find on craigslist…

But you have to fight the impulsive gotta-have-it-now thing and wait for something you like to show up.

By: Kyle

Kyle — Fri, 15 Jan 2010 13:59:20 +0000

Early Retirement makes a good point, you can almost always save more by paying cash upfront. I agree with you Matt that if you are going to finance it, do it because you have the cash to pay on hand and just want to continue to allow it to earn interest for you. Don’t take on a debt if you can’t afford to pay it off immediately if the need arises.