Need a new refrigerator, washing machine or other similar household items, but your wallet is empty? This is not an unusual situation and can happen to anyone. Fortunately, shops (or, more precisely, their credit partners) often offer the option of hire purchase, which helps customers slip gracefully from such unpleasant situations. Often, they even offer the option of hire purchase without any increase. But what to be careful not to make it more expensive?
Installment purchase with no increase? Be careful not to get overpriced!
The difference between consumer credit and hire purchase
Where is the difference between a classic online loan and a hire purchase? As the name of the installment sale suggests, it is a loan intended for a specific purpose. On a specific piece of goods from a particular seller. In installments, you can buy a specific piece of electronics or household equipment.
However, the repayment is not provided by the shop in which you shop, as customers often think, but by the same credit companies that offer consumer loans. Nowadays installment sale is mostly provided.
Consumer credit is usually of no purpose compared to hire purchase and its amount is not affected by the specific goods you want to purchase. For example, you can take a loan of fifty thousand, use twenty for merchandise, and use thirty according to your other needs.
However, if the consumer loan is not your first free loan with companies offering this option (and usually only a loan of a few thousand crowns), there is no risk that you would get it on such favorable terms. Buying in installments is often without an increase, so you don’t have to pay an extra crown for it. However, this offer is only valid when you honestly comply with the terms and conditions.
Installment purchase is really no increase?
If you have already decided to use the installment purchase directly at the store, first make sure that it is not misleading or directly misleading.
If the installment sale is really without an increase, its APR will be 0%. If you buy a refrigerator for twenty thousand crowns, you will pay the company an installment of USD 2,000 for ten months and nothing more. If the APR is higher than zero percent, this is a signal that the trader is not dealing with you so completely and a sign that you should really think about signing the contract.
Of course, not every company offers to hire purchase without any increase. It is often a loan with traditional fees. Here, all the more you need to consider whether this purchase really pays off. In this case, the APR can range up to 30% and a classic loan could cost you much cheaper.
As with any other loan, it is necessary to consider its terms and conditions and compare them with other options.
Therefore, under no circumstances should you purchase spontaneously in installments and first compare all available options on the Internet.
How to get repayments and what to prepare?
As we mentioned, hire purchase is a credit like any other. Therefore, the company will examine you before granting it as well as when drawing a consumer loan. He will first need to verify your identity. You will need an identity card and, in some cases, a second identity document.
Because it is a classic loan, the merchant you will handle the application with will not do without some form of income confirmation. Somewhere you will be asked for a confirmation from your employer or a tax return, while elsewhere an account statement will suffice. That’s why it is good to find out the conditions in advance on the Internet so that you are properly prepared and do not have to return for the loan several times.
Of course, if you are already in preparation, you can buy goods in installments not only in the store. This option is also offered by many often cheaper e-shops. Obviously, online hire purchase has a number of advantages, especially in the fact that you have more peace of mind to study all the conditions and have more space to compare them with the competition and see if it is really the most advantageous option and whether you need a consumer loan cheaper.
In addition to checking and recording the above-mentioned documents, the trader will surely check you through the non-bank register of debtors, where he/she will know whether you do not have too many loans or even have overdue liabilities.
From this, it will decide whether you can afford to hire purchase and move to the actual signing of the contract.
In any case, read the agreement. Pay particular attention to the APRC and the penalties for late payment. Do not be afraid to consult the contract directly with the trader or your financial advisor.
How is it worthwhile for companies to pay installments without increasing them?
The old proverb: “no chicken is free to graze” is still one of the truest truths. Let alone insofar as it relates to the provision of financial services and loans.
However, providing the option to purchase by installment without increase is a move that pays off to all parties.
The merchant sells the goods to a customer who would otherwise not be able to afford it. The customer may spread the repayment into acceptable installments.
But what is the benefit of a company that provides this perhaps too advantageous loan?
Just a few things. The first is a cheap marketing campaign. Like a merchant, he gets a new customer and especially his valuable personal information.
This company is more easily targeted by advertising and offering advantageous loans to a specific person, in addition, it can, for example, send you a credit card that you activate by using to become a paying customer.
Some companies offer insurance in addition to hire purchase, so the customer chooses to pay extra for a sense of security.
Non-banking companies that provide one or the other type of loan for free also often live on people who break the contract. They do not pay in time, stop paying completely and thus increase their fines. If the delay in repayment exceeds a certain limit, the creditor sells the claim to the collecting company and earns it again.