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Message
Financing Furniture: Is this financially acceptable?
Posted on 6/26/12 at 6:51 pm
Posted on 6/26/12 at 6:51 pm
I'm 23, have had a job for about a year now, and am about to move into a townhome with two roommates. I really want to upgrade my bedroom, because since finishing college I have just had the basics. I can get everything I want for about $3,000 or so, which I can easily afford in cash, but is there anything wrong with taking out one of these ridiculous 60 month interest free monthly payment offerings? I know you're screwed if you miss a payment and hit with 20 percent retroactive interest, but from a cashflow perspective doesn't it make sense to just pay $50 a month over the course of 5 years?
11
Posted on 6/26/12 at 6:59 pm to LSUtoOmaha
I would try to negotiate a lower price for it, but if you can't then I get what you are saying. I did that with a 21 month 0% interest credit card and just stuck the balance in a savings account at 1% per year during grad school. It ended up working out to a little less than 2% cash back, which wasn't a bad deal.
However, what is the value of $3,000 with interest rates at .75%? Is it worth playing with fire over? Are you going to take the cash and invest it in the market? What's the upside and is it worth the (even the smallest) chance of getting screwed?
However, what is the value of $3,000 with interest rates at .75%? Is it worth playing with fire over? Are you going to take the cash and invest it in the market? What's the upside and is it worth the (even the smallest) chance of getting screwed?
Posted on 6/26/12 at 7:00 pm to LSUtoOmaha
I take advantage of these offers if available. True you can get screwed if you miss a payment. But if they want to let me pay over a longer time period with no penalty then I'm all for it. But I do usually make sure to pay in full a few months early.
Posted on 6/26/12 at 7:23 pm to LSUtoOmaha
I do it all the time and Im an OT baller. 
ETA: I also pay off a couple months early to avoid the scammers. Also, watch for cycle change tricks and late arrival of bills. Set it up on autodraft if possible.
ETA: I also pay off a couple months early to avoid the scammers. Also, watch for cycle change tricks and late arrival of bills. Set it up on autodraft if possible.
This post was edited on 6/26/12 at 7:25 pm
Posted on 6/26/12 at 7:33 pm to TheHiddenFlask
quote:
However, what is the value of $3,000 with interest rates at .75%? Is it worth playing with fire over? Are you going to take the cash and invest it in the market? What's the upside and is it worth the (even the smallest) chance of getting screwed?
The upside is I could put that $3,000 towards a student loan I have at 6.9%.
Posted on 6/26/12 at 7:34 pm to LSUtoOmaha
quote:
The upside is I could put that $3,000 towards a student loan I have at 6.9%.
Sounds like a winner.
Posted on 6/26/12 at 7:49 pm to LSUtoOmaha
It doesn't really matter what you are financing. If you are getting money at 0% today then you are fine so long as you make good and damn sure you can pay by the deadline, don't miss any payments, etc.
That said, it might be worth offering to pay a nonzero rate. The price may go down a lot.
That said, it might be worth offering to pay a nonzero rate. The price may go down a lot.
Posted on 6/26/12 at 8:07 pm to foshizzle
Yep. Furniture can be extremely marked up. Dont be afraid to haggle. Get a good price and then give a "well, if you throw in a mattress at half price, I'll buy it all" deal.
And I usually take 0% deals for purchases over $3k. Not a compelling reason not to IMO.
And I usually take 0% deals for purchases over $3k. Not a compelling reason not to IMO.
Posted on 6/26/12 at 8:39 pm to LSUtoOmaha
My GF was in a similar situation 2 years ago. After she mentioned she planned on paying all cash, they knocked about 15-20% of the purchase price. This was at a big box furniture store in Houston, but I'd imagine they all have similar practices. It's worth haggling to see what their bottom dollar is, but as you mention it might be worth taking the financing and putting the cash against your student loans.
Posted on 6/26/12 at 10:05 pm to LSUtoOmaha
I'm sure I'll be the minority here, but I recommend just paying cash for it. You are asking Murphy to come knocking on your door, for not much upside in my opinion.
Concentrate on paying down your student loan without borrowing elsewhere.
In fact, since you have student loan debt, I'd continue living like a college student (with my cheap furniture) until it's paid off.
Concentrate on paying down your student loan without borrowing elsewhere.
In fact, since you have student loan debt, I'd continue living like a college student (with my cheap furniture) until it's paid off.
Posted on 6/26/12 at 10:35 pm to LSUtoOmaha
I took out one of these loans and have been treating it as a thrill-seeking adventure. The further out I get, the harsher the penalty is if I ever screw up and miss a payment.
Posted on 6/26/12 at 10:37 pm to BRhuskyfan80
If you have 6.8% interest on a loan the most financially responsible thing you can do is either keep your furniture or get some cheap used stuff. Furniture is one of the biggest rip-offs because the markup is crazy high and no one is going to notice anyway.
Posted on 6/27/12 at 7:41 am to LSUtoOmaha
The store is way more likely to negotiate price if you're paying with cash and if you can save anything on the price it will make up for the free loan
Posted on 6/27/12 at 9:05 am to LSUtoOmaha
You're 23, WTF are you doing buying furniture? Let your wife buy it when you get married.
If you buy it these 0% loans are standard and I can't see why you wouldn't do it. Put the money to work for you and just pay off the loan before the deadline passes.
If you buy it these 0% loans are standard and I can't see why you wouldn't do it. Put the money to work for you and just pay off the loan before the deadline passes.
Posted on 6/27/12 at 11:46 am to LSUtoOmaha
If I'm understandin correctly:
Option 1: pay 3k in cash towards a student loan with 6.9% interest rate and finance the furniture with a 0% interest rate.
Option 2: pay 3k in cash towards furniture, be done with it forever, continue paying the minimum on a 6.9% student loan.
I would probably try and knock out the student loan. Bigger roi here assuming you wont miss a payment on the furniture.
Although at 23 I would stongly consider not spending 3k on furniture, but then again, I'm 23 and just bought a new BMW so....
Option 1: pay 3k in cash towards a student loan with 6.9% interest rate and finance the furniture with a 0% interest rate.
Option 2: pay 3k in cash towards furniture, be done with it forever, continue paying the minimum on a 6.9% student loan.
I would probably try and knock out the student loan. Bigger roi here assuming you wont miss a payment on the furniture.
Although at 23 I would stongly consider not spending 3k on furniture, but then again, I'm 23 and just bought a new BMW so....
Posted on 6/27/12 at 4:34 pm to LSUtoOmaha
quote:
Financing Furniture: Is this financially acceptable?
What is acceptable is completely up to you.
Financing companies can actually hurt your credit score.
quote:
I can get everything I want for about $3,000 or so, which I can easily afford in cash, but is there anything wrong with taking out one of these ridiculous 60 month interest free monthly payment offerings? I know you're screwed if you miss a payment and hit with 20 percent retroactive interest, but from a cashflow perspective doesn't it make sense to just pay $50 a month over the course of 5 years?
If you have the cash and have enough saved for an an emergency fund, I would go ahead and pay and be done with it. The risk to reward ratio simply is too great - you won't be earning that much interest on $3K, but you'll sure pay a lot of interest if you miss a payment.
Posted on 6/27/12 at 4:43 pm to CoolHand
quote:
Concentrate on paying down your student loan without borrowing elsewhere.
In fact, since you have student loan debt, I'd continue living like a college student (with my cheap furniture) until it's paid off.
I agree 100% with this.
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