[Seminole]

Originally Posted by FStop7

lets say you bought 5000 bucks worth of stuff with this 12 months same as cash thing.

if after 12 months you still owed 100 dollars, do you get hit with interest for just that amount or do they hit you with the deferred interest of the full original amount of 5000?

Full amount.

[radix]

Originally Posted by FStop7

lets say you bought 5000 bucks worth of stuff with this 12 months same as cash thing.

if after 12 months you still owed 100 dollars, do you get hit with interest for just that amount or do they hit you with the deferred interest of the full original amount of 5000?

Considering .2299 of $4200 is $965, and the OP got hit with $1089 in interest and feels, I'd guess you'd have to pay the deferred interest on the whole 5000.

[Freakazoid]

Originally Posted by O-cha

The specific case I am talking about is a person with a very low relative cost basis on their investments would be much smarter to not remove money from those investments and incur the associated costs. It compounds when you consider the loss of potential and the loan saves you money.

This, if done correctly credit can make you money...but again that requires you to be on top of your game, so to speak.

[khaye1]

^^^ that. For example I use my Costco Amex for everyday purchases (gas, food etc) and my bill is > $2k a month. I use it because they give me cash back which averages to $40 a month, give or take a few bucks. I'm disciplined enough to pay it off every month so I can take full advantage of the rewards program and not pay any finance charges...I always manage to top out and get $500. Don't get it twisted, I don't go out and spend money because I know I'm getting cash back...I charge because I'd rather let my money sit in a bank and earn interest for a month rather than losing it.

[NYCGarbagePrince]

I pay off all my credit cards every 30 days. So my balance at the end of the month is always $0.00. Credit is very valuable. Paying for everything is cash is very responsible but doesn't help raise your credit score or make you a desirable loan applicant.

As far as these 0% 12 month credit cards that these stores do, they are fine as long as you are responsible. Only thing you need to take into consideration is this. If you are spending $5,000.00, can you actually afford it? If so, than take the 5k and invest it in something for the 12 months and pay the 5k down over the 12 month period. Investing 5k into a washer and dryer may be fine as far as your clothes are concerned but your money could be making money for you during the 12 month period. You are wasting an opportunity to use that money to get some ROI.

[FStop7]

Originally Posted by Seminole

Full amount.

WOW

that is a shit deal

sorry OP, you definitely should not have signed up for that one

Consumer credit comes in all kinds of different flavors. Some of them are pretty good, as people have been pointing out. Some of them are utter garbage, as others have pointed out. IMO the "12 months same as cash w/ deferred interest" offer is strictly in the garbage category. To hit you for the full amount of interest even if you still owe only a small portion of the original balance? You may as well beg to be screwed over.

[MisterSkiMask]

That sucks, but as has been said they are all like this.

I have taken advantage of these offers a number of times, free money is free money as long as you pay it off in time. I typically make sure it is paid off a month before it is due.

[texasmojo]

4200 is a lot to pay in 1 year too.

[NYCGarbagePrince]

Originally Posted by texasmojo

4200 is a lot to pay in 1 year too.

Not really. Not if you are purchasing something you can actually afford. If you break $4,200.00 down into 11 payments that is roughly... $382.00 a month to be on the safe side and make sure you have it paid off in full prior to the interest kicking in. If you can't afford the $382.00 a month, than you shouldn't be purchasing the products. Simple as that.

[Freakazoid]

Originally Posted by NYCGarbagePrince

Not really. Not if you are purchasing something you can actually afford. If you break $4,200.00 down into 11 payments that is roughly... $382.00 a month to be on the safe side and make sure you have it paid off in full prior to the interest kicking in. If you can't afford the $382.00 a month, than you shouldn't be purchasing the products. Simple as that.

[Couch]

Originally Posted by greycrx87

it was 12 months....

Exactly. That should tell you everything right there, without any further reading.

[Hawkeye]

That is pretty standard for those no interest things. Sucks they don't make it well known.

[greycrx87]

Originally Posted by Couch

Exactly. That should tell you everything right there, without any further reading.

The guy that sold me the appliances did not explain it, he cared more about locking the deal before the Labor Day Weekend.

I take the blame for not reading the fine print, but I will try to speak with the manger and perhaps like someone mentioned above they will lower this for me.

[NYCGarbagePrince]

Your best bet is to offer to pay the actual amount remaining in full if they waive the interest for you. Most will accept this offer. Bird in the hand and that old adage.

[Maestro]

As the ops said lesson learned ... however there is more to learn here.

Beside the deferred interest, you probably paid 12% to 15% more than if you just paid cash upfront. Due to the fact that most places where you are making the purchase do not self finance will increase the selling price by 12% to 15% to cover the cost of not getting their money till you pay off finance company. Even in the case of GE, GE capital is a different business than GE appliances.

Next, as someone pointed out ALWAYS pay these things off at least 2 billing cycles ahead of time, or if you can pay it electronically on their website. Most of these company doing this usually do not make it easy for you to make online payments. Generally speaking the payment later companies make it really hard to make your payments on time. They sometime randomly change the due date as well or pull other things so your forced to pay the interest.

I even seen where they will not send you a bill until right before the year is up, they do not give you the option to pay ahead.

I only had one bad experience with these deals and it was with BillMeLater which a lot of online retailer advertise. The issue I had was with a company which I have been buying from for almost 15yrs online and few years back I bought a new computer for my son for xmas and decide to use the BillMeLater promotion from the company I bought the computer through.

Anyway, it is 1.5 months prior to last payment before interest is due, and I make the final full payment. All along I was using my online checking to pay and every payment up to this point was received on time even though BillMeLater would not allow a EFT they require my bank to cut them a physical check each month.

Anyway, I see that my bank issued the check and figure I was done. Well about 5 days before the original due date for the loan I get a mailing from BillMeLater, figure it was the final statement saying it was pay in full I did not open right away. A few days after the due date I open it to find there was a balance equal to the check which my bank issued. I call up BillMeLater and begin the fight, needless to say they stood behind they never received the last payment and I could not prove they did.

I did some background checking on this companies business practices and found that lots of people's last payment got lost prior to all the deferred interest hitting the account. I ended up paying the deferred interest plus late fee to BillMeLater since they were threatening to trash my credit history if I did not make the payment while I disputed their claims they never received payment.

I did get my money back, not from BillMeLater but from the online retailer who I bought thousands of $ of equipment from over the years and also gave them a list of 10 peoples names who I referred business to them over the years. It was not a fight at all, they saw how much business I did with them and they were happy to refund my money.

If you are willing to use someone else's money you have to be prepared to play by their rules and understand the risk. I used to do this all the time, do the 6 month or 12 months free financing, most times it was using one of my own credit cards, I would negotiate a good deal on something then try putting on one of my free finance CCs and if the retailer would not take it since they did not pay a CC fee themselves, I would cut them one of those CC checks. Either way I got a good deal and used the CC money for 6 to 12 months. Today CC companies are charging 3% to 4% to use those checks so it not that great of deal anymore.

[JayML]

Lol its funny how people think. rent to own, deferring payments etc etc

No one ever wants to buy something and have to actually pay for it. I know its a crazy concept to pay for things you buy.

Almost everywhere else in the world, if you dont have money, you dont buy anything.

North America and Europe are messed up.

[Hawkeye]

Originally Posted by slapmyfro

Lol its funny how people think. rent to own, deferring payments etc etc

No one ever wants to buy something and have to actually pay for it. I know its a crazy concept to pay for things you buy.

Almost everywhere else in the world, if you dont have money, you dont buy anything.

North America and Europe are messed up.

I take it you bought your 2007 E90 AW, 2010 E550 4 Matic, and 2010 RDX in full... or did you take out a loan? Technically you are renting to own it from whatever bank you took the loan out for. Same with your house. So stop being all preachy. Every country does it, not just America and Europe.

[ideliver]

best buy does the same thing...usually for 18 to 24 months though...

[double_j]

I tend to forego those offers because while I would appreciate the free cash flow, I wouldn't put it past myself to forget when I needed to pay it off.

Technically, wouldn't they have to calculate the interest on the balance as it stood over the course of the interest free period?

For example - if you financed 5000 on day one and paid half of it off the next day but then let the remaining 2500 run for the balance of the period then the interest calculation after the 12 month period should actually be calculated on the 5000 for one day and 2500 for the remaining 364 days.

If they charge the full interest amount on the full purchase price regardless of the balance over the course of the 12 month period, they're actually charging higher than the stated rate.

[Freakazoid]

Originally Posted by double_j

I tend to forego those offers because while I would appreciate the free cash flow, I wouldn't put it past myself to forget when I needed to pay it off.

Technically, wouldn't they have to calculate the interest on the balance as it stood over the course of the interest free period?

For example - if you financed 5000 on day one and paid half of it off the next day but then let the remaining 2500 run for the balance of the period then the interest calculation after the 12 month period should actually be calculated on the 5000 for one day and 2500 for the remaining 364 days.

If they charge the full interest amount on the full purchase price regardless of the balance over the course of the 12 month period, they're actually charging higher than the stated rate.

what you're saying is correct, however in the OPs case he paid at the end of the term anyways....
but what you're saying is correct, it would have to be actual accrual of interest, not arbitrary interest.

[double_j]

Originally Posted by Freakazoid

what you're saying is correct, however in the OPs case he paid at the end of the term anyways....
but what you're saying is correct, it would have to be actual accrual of interest, not arbitrary interest.

But it sounds like the OP paid off 1,400 at some point before the 12 month period was up. If this is the case, then I'd expect the interest charges to less than $1,085, give or take, at the very least. (22.99% interest compounded on 4,200 daily for a year).

[greycrx87]

Originally Posted by double_j

But it sounds like the OP paid off 1,400 at some point before the 12 month period was up. If this is the case, then I'd expect the interest charges to less than $1,085, give or take, at the very least. (22.99% interest compounded on 4,200 daily for a year).

I did not have a chance to speak with them today, but you are right the numbers dont add up considering my first payment being 500 bucks.

That would leave me with $3,800 and 11 months to go.

How did these fcks come up with $1,089