What We Should Know About the "Pay Later" Promotions
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Consumers are often exposed to promotions when purchasing products where they can take it home and pay later. It's generally the case for domestic products such as appliances, furniture, beds, or any other goods at relatively high price for household. We also find this type of promotion when leasing or financing vehicles where no payments and no interests are required to be disbursed in the first few months. It is certain that this will ease the transaction at the moment of the purchase for consumers, but is it an advantage for them to pay later?
The "no payments for 12 months" promotions on furniture and appliances do not mention anything about interest fees. Yet, credit in the business world is never free and the interest fees do not simply disappear. The profit margin of companies selling appliances is not very high, if, on top of it, they have to pay the interest fees, the no payment promotion is a serious risk to their profitability. This is why credit fees are often past to clients and the interests are hidden in the price of the product. If a client decides to buy the appliances cash, and not to take advantage of the promotion, he will pay for credit interests that he actually didn't use!
For companies in the furniture and bedding industry, the profit margin may be higher, but their line of conduct is the same; the company might hide the costs of interest in the price. Is that unfair for those buying cash? Yes, and consumers have to be vigilant, it is their right not pay for credit they are not using. If you want to use the credit behind this promotion, try to get informed on the interest rate included in the price and see if it is worth it. For example, an included rate of 5% annually in the price could be a fair rate.
Same types of promotion are offered when leasing or financing vehicles such as cars, boats, motorbikes, ATV, snowmobile, etc. Promotion that we frequently see give no payments and no interests for the first few months. This means that you can enjoy the possession of the vehicle without having to pay anything in the first months. Again, nothing is free, and the interest fees are most probably included in the total price. You wont pay anything during the promotional months, but the interest fees of the delayed payments will be included in the monthly payment. It is good to know there are interests from delaying the payments and you may pay for it.
These are a few examples where consumers think they will not pay any interests on a delayed payment due to the promotion. We need to understand that nothing is free in the world of credit and that companies offering free credit wouldn't stay in business for a long time. There is always someone, somewhere, paying the bill and they always try to pass it to someone else, usually the consumer.
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