Should I use Store credit to pay for a new Fridge?
When you go out to buy a new fridge, whether you are purchasing in store or online, you will often find that the retailer will offer you credit. This means that you will be able to buy the fridge right away and then pay for it later in instalments. This makes the item much more affordable, but is it something that is worth doing?
Consider the extra cost
So you need to be very aware of the costs of doing this. You will be able to calculate how much extra the fridge will cost if you take into consideration the interest rate. Do make sure that you also consider any extra costs that there might be. There could be administration costs for setting up the loan, for example. Also there will be charges if you do not manage to repay the loan when required. It is worth taking a look at these charges as well and thinking about whether there is a risk that this might happen and if it is something that you are willing to risk having to pay. You may be confident that if you set up a direct debit to make the loan repayments then you will easily be able to pay it, but this may be the case for everyone. So give it some thought and consider all of the possible costs.
Compare with other loans
It is well worth comparing the costs of the store credit with other loans from more conventional lenders. It could be cheaper to borrow the money in a different way. Depending on how much you are going to borrow you may find that a credit card or personal loan will be a cheaper way to borrow the money. Check out not only the interest rates and costs but also late repayment fees and compare as many different loans as you can. You will then have an idea of how much you are likely to pay for different types of loan and this will help you to make a decision as to which is going to be the best for you to take out.
Interest free credit?
You may find that there are some shops that will offer you interest free credit when you buy a fridge with them. This means that you will be able to spread the payments for it, without having to pay anything extra than the advertised price. This can sound really great, but you will find that the cost of the loan has been added in to the price of the item. This means that it could be dearer to buy that specific model of fridge from that retailer compared with buying them from another. So make sure that you compare them carefully and see whether any other shops have the same model for less money. You may also find that the fees for a missed payment are much more expensive if you get interest free credit as this is another way that they could make some extra money from you. It is certainly well worth being aware and checking carefully before buying.
Is saving up better?
It is also worth considering whether you would just be better off saving up. If you are going to be paying regular instalments, then you could just put money away regularly and then use that to buy the fridge. If you need the fridge immediately as your last one has broken down, then you will not have time to do this. However, if you are replacing an old model, then you will have time to save up first. This will mean that you will not have to pay anything extra for the fridge and it can be satisfying knowing that you have taken the time to save up and are not paying more than necessary.
Obviously all of these options will take time and effort to put into place. It can feel like it is a lot of effort, but you can end up paying a lot more money than necessary of you do not do the research, It is always good to know exactly how much you will be paying for things and whether there are cheaper ways to get something. Any savings that you make will mean that you are able to afford other things or to put some money in a savings account. So spending a few hours finding out how much the cost of the credit will be, comparing it with other loans and deciding whether you are happy to pay that extra or would rather save up, can make a huge difference. You could end up saving a significant amount of money just for a bit of effort. If you do this with everything that you buy then the savings really will add up.