Word of Warning!
While this may seem like a good deal at first, and may help some of the beginners and veterans, it is considered to be one of the worst scams in the US. Mortgages are the #1 scam in this country.
28.99% interest !!!! Would anyone pay 28.99% sales tax on their purchases? Doubtful. Interest is nothing more than a tax.
If you can't afford to pay cash then
DON'T BUY IT! Save your nickles and buy it when you do have enough. The majority of people that take advantage of these "deals" are people that can't afford to pay the full amount up front. The "deal" then effectively takes advantage of them.
Sorry Russ, not bashing you, but I've seen too many families lose everything due to these "sweet" deals. The only ones that can truly take advantage of these are those that already have the cash to pay it off in the first place.
I've only financed
one car in my life, all others (cars, trucks, trailers) where paid for in cash. This goes for all my equipment and tools as well. If I need a piece of equipment I can't afford, I save up until I can, and then I have no worries of paying the outrageous interest rates.
Here's how most of these deals work. If you borrow $1,000 on a 12 month same as cash plan, you have to pay it back within 12 months to avoid interest. That much is obvious. However, the term "same as cash" is very misleading because most of these so called deals are actually deferred interest payment plans. So, if you borrow $1,000 and pay $950 of it in 12 months and still owe $50, you will be charged interest on $1,000, not on $50! In other words, you will be charged back interest on the full amount regardless of the amount you paid on the loan during the 12 month "same as cash" period.
What's even worse is that consumers rarely think about the interest they will have to pay if they can't pay the full amount within the allotted time. We're not talking about 12.5% or even 20% interest. The annual percentage rates on these "same as cash" deals can be as high as 40% or 50%. The minimum payments on the billing statements are too low for borrowers to pay off the loan in time to avoid interest, and this tempts people with tight budgets to fall behind schedule. This is what the creditor wants because the borrower gets buried in an unexpected, massive heap of debt.
Example: $75 payments times 12 months = $900. At the end of the promotional period you're going to get nailed for another $290 in interest. If you continue to make the same payment, you will continue to incur the same interest rate. If you miss a payment, then that interest rate could double.
At the end of the promotional period, if you haven't already paid it off, you will be looking at a balance of $390 ($100 balance + $290 in interest).
Make a $75 payment and your balance is $315. Now add the interest rate for your new balance ($315 * 28.99%) = $406.
Make a $75 payment and your balance is $331. Now add the interest rate for your new balance ($331 * 28.99%) = $407.
Make a $75 payment and your balance is $352. Now add the interest rate for your new balance ($352 * 28.99%) = $454.
Make a $75 payment and your balance is $379. Now add the interest rate for your new balance ($379 * 28.99%) = $489.
Do you see how the balance keeps going up (and not down)? This is a common credit card tactic.
One way to take advantage of this type of promotion is to make sure your payments will pay off the balance 1 or 2 months before the period ends (the sooner the better). Making $100 payments (on $1000 @ 12 months) will pay it off in 10 months. NO INTEREST!!!
Also, read the fine print regarding late payments. This could activate the advertised interest rate immediately or an even higher interest rate (penalty rate).
Caveat emptor
