"If you want it, you get it!" or "finance with a no-worry loan and take it with you on the spot" – advertising promises uncomplicated wish fulfillment through credit. Every second person now expects consumer goods such as televisions, smartphones and furniture to be paid for in monthly installments. In 2017, the banking association even came to the conclusion that 61 percent of financed purchases would not have been made without the option of repayment.
But be careful: favorable financing offers directly from the dealer are always a credit! And no credit is free. Whether zero-percent financing, immediate financing or tempting-sounding installment payments: all offers can harbor costly pitfalls. And then consumer financing becomes a financial boomerang due to additional contracts, insurance premiums or credit card fees. The following tips are available here as a compact checklist.
Clarify needs
The first step is to clarify what needs to be purchased and how much it should cost, regardless of the financing option. It makes a difference whether the defective washing machine urgently needs to be replaced or the new smartphone generation is on the wish list. indispensable: price comparison. Small installment or even zero-percent financing does not mean that the goods are also cheap.
Exploring the financial burden
No matter how simple, tempting and uncomplicated the installment offers made by dealers sound in their advertising, they are always credit offers from a bank! In this case, the retailer cooperates with a credit institution and arranges a credit agreement with its cooperation partner for the customer at its sales outlets. The buyer thus becomes the borrower and contractual partner of the bank – with all the risks and obligations. The offered installment payment should therefore only be used if your own budget has been checked beforehand for the additional burden – and the loan can also be repaid from reserves if necessary. Even the most favorable consumer financing becomes an expensive affair if the installments can only be paid from the overdraft facility in the checking account.
Resist seller arguments
With phrases such as "special loan conditions today only" lure dealers and sellers into making a quick decision for a credit-financed purchase. However, you should not let yourself be put under pressure even by the reference to limited offers. Steadfastness is also required when the salesperson offers more expensive products with "why don’t you take the TV with the bigger screen?! Costs nothing." advertises. "Costs nothing there is no such thing as a credit either: either the rate is higher or the term longer for a more expensive product – or even both.
Watch out for additional contracts
All contractual documents should be checked before signing a contract. Often, residual debt/installment protection insurance or warranty contracts/extensions are offered with a financed purchase, for example. It is important to consider carefully whether these make sense in individual cases. Often these are overpriced and/or unnecessary.
Check the fine print
Take a close look when signing the contract. Because credit-financed purchases are often not only offered "zero-percent financing", but also "instant financing" The purchase price is not paid in full, but, for example, a higher credit limit with an additional chargeable credit card. Sometimes two credit agreements are hidden here: one favorable for the current purchase and one more expensive "for the wishes that are still to come". Another potential pitfall: sometimes the favorable interest rate is only valid for a limited period of time and the agreed (minimum) rate is not sufficient to pay off the loan within this time. Such cost-driving contractual components should be avoided at all costs!
Especially for young people, there is a budget planner on checked4you, the online youth magazine of the verbraucherzentrale NRW (consumer advice center North Rhine-Westphalia).