When browsing in-store offers, we often run into free credit offers for product purchases, advertised at 0% interest or 0% APR, often on a single product, sometimes on a complete product category.
One wonders what this scam might be, or if not, who is worth it and why?
In this article, we look at the causes and also look at who the free credit is and who is not.
A 0% interest rate is not a free loan
Very often you will find 0% interest in advertised goods in various advertising publications, but it is only a small letter that, although they do not charge interest, they do charge a management fee, so a free loan can in fact be quite high, up to 25%.
Pay attention to THM
However, there is indeed a 0% cost loan, which is advertised at 0% APR. APR is the abbreviation for Total Cost Indicator, which includes all the hidden and tricky costs of a loan. If you read a 0% APR, it is really a free loan, provided you always comply with the terms given.
Who is this good for?
A retailer often wants to sell older electronics or just generally wants to boost sales and is willing to make a sacrifice. However, a 10% discount now doesn’t attract anyone’s attention, so it bears the cost of lending and pays interest instead of the buyer.
It is true that we receive older products with free financing, but that the new ones are also eligible for the promotion. These are usually offers with a maturity of 4-10 months.
Who should take advantage of these offers?
There are two types of people in this case: one does not have the money to buy the product, so he asks for a loan, the other could buy it for cash, but prefers to loan it to save his money elsewhere.
In the first case, I think that if you don’t have the money for a camera or notebook, that is a warning sign that you don’t want to buy one.
I always leak advertisements for a $ 20,000 digital camera for 10 monthly installments. If you don’t have $ 50 in your pocket, then don’t want to buy anything like that, borrow your neighbor’s car sometimes if you want to take a picture, but don’t borrow (new) credit, but rather fix your finances.
If you don’t have $ 100,000 in savings, then the smallest problem is more than having to buy a new TV or notebook.
And if, like a wise man, you put in an emergency reserve for unexpected expenses (four-fifths of Hungarians do not have one), you won’t have to run for a loan because of a sudden fridge. If you don’t have any savings, here are some articles on the topic.
So if you do not have the money, do not take any credit because you will only make your financial situation worse. I know it sounds incredible, but you can live without a new TV and a new cell phone.
How much do you gain from buying a product for free credit instead of cash?
It is widespread folk wisdom that somebody buys things for free, even if he can pay them off otherwise, because in the meantime he is making money elsewhere and earning money on it.
Before you join them, let’s get a calculator and calculate how much you actually clown for 4-10 months.
Let’s look at the average longest maturity, 10 months, the amount is 100 thousand HUF.
Since you have to pay one-tenth of the amount every month, you can’t really make that money, or just for one month at a 3% interest rate. But for now, let’s get this one, get a special discounted 6.5% interest on your money. As you can see, I’m too benign, but it doesn’t matter.