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>it would never occur to me to buy furniture on credit Ikea, and nearly any reasonably sized furniture store, has a financing arm. So I assume it's common (an

>it would never occur to me to buy furniture on credit Ikea, and nearly any reasonably sized furniture store, has a financing arm. So I assume it's common (and a money maker). Thing is, often these places offer 6 months interest free and what not, so as long as you pay off your debt in the allotted time, it's smarter than paying cash.

Retric 7y ago
Those loans can be a profit center as they make it really easy to miss a payment, and then instantly jack up the rates to ~20% APR. Think short window to make a payment and no automatic payments available. It’s probably not worth it for effectively a sub 1% discount.
- navigatesol 7y ago
  >It’s probably not worth it for effectively a sub 1% discount. The discount is small, I agree. But it's always worth it. It's riskless if you have the cash anyway.
  - Retric 7y ago
    It’s up to you how many hoops you want to jump through for ~10$. Just be aware some companies do things like destroying mail without opening it.
  - Slartie 7y ago
    It's worth it until you miss a payment and run in the absurdly high interest rates. Which makes it not riskless, because your risk of missing a payment is non-zero, even if you think it is zero. And regarding having cash: if you set aside the full amount in cash at time of purchase in order to reduce the risk of not being able to pay the rates, then you did win absolutely nothing. Opportunity cost of not having that cash available for profitable investments in case of paying in cash is what could possibly be the reason for the credit variant being cheaper in the end, but that of course depends on you investing the cash and divesting just when it is necessary to pay a rate.
  - vasco 7y ago
    It's not always worth it. If you have to spend 1 hour to set it up initially, sign the paperwork and then an extra 15mins per month paying it, it might already be very much not worth it.
  - krageon 7y ago
    The fact that these constructs exist and only make money when people make mistakes should tell you that enough people make mistakes to make it profitable. This makes it not riskless at all. It makes it predatory.
    - bytesandbots 7y ago
      These constructs also helps people buy more expensive items than what they could afford without credit. I wouldn't jump to that conclusion just because it exists. Credit companies also take small fraction of the transaction. The store is willing to pay that fees because it increases their revenue.
      - krageon 7y ago
        If they can't afford it without credit, they can't afford it with. And vice-versa. There is no credit construction that will make this different, except if it has a negative interest rate. To me this is obvious because if they can afford the credit, they can afford to save.
atombender 7y ago
Many places offer interest-free deferred payment. For example, Design Within Reach, through Synchrony Bank, lets you pay in equal installments over 24 months (or less, if you want) [1]. APR around 20% kicks in if you go past the time limit. [1] https://www.mysynchrony.com/mysyf/paymentestimator.html?intcmp=designwithinreach-homefurnishingsstore-infobox-View_educational_materials-internal https://www.mysynchrony.com/mysyf/paymentestimator.html?intc...
- bluedino 7y ago
  Back when I was younger I bought about $1500 in furniture from Art Van on credit, and did not pay it all off within the 18 or 24 months Then I got smashed with a HUGE interest charge, they charge you ALL of the interest from the 18/24 months at the end of that time if you have a blance I buy $300 couches from the clearance center now, in cash.
  - rubyskills 7y ago
    If you have the $300 in cash, why would you not put it on a credit card that earns you cash back or points?

Retric 7y ago

Those loans can be a profit center as they make it really easy to miss a payment, and then instantly jack up the rates to ~20% APR. Think short window to make a payment and no automatic payments available. It’s probably not worth it for effectively a sub 1% discount.

navigatesol 7y ago
>It’s probably not worth it for effectively a sub 1% discount. The discount is small, I agree. But it's always worth it. It's riskless if you have the cash anyway.
- Retric 7y ago
  It’s up to you how many hoops you want to jump through for ~10$. Just be aware some companies do things like destroying mail without opening it.
- Slartie 7y ago
  It's worth it until you miss a payment and run in the absurdly high interest rates. Which makes it not riskless, because your risk of missing a payment is non-zero, even if you think it is zero. And regarding having cash: if you set aside the full amount in cash at time of purchase in order to reduce the risk of not being able to pay the rates, then you did win absolutely nothing. Opportunity cost of not having that cash available for profitable investments in case of paying in cash is what could possibly be the reason for the credit variant being cheaper in the end, but that of course depends on you investing the cash and divesting just when it is necessary to pay a rate.
- vasco 7y ago
  It's not always worth it. If you have to spend 1 hour to set it up initially, sign the paperwork and then an extra 15mins per month paying it, it might already be very much not worth it.
- krageon 7y ago
  The fact that these constructs exist and only make money when people make mistakes should tell you that enough people make mistakes to make it profitable. This makes it not riskless at all. It makes it predatory.
  - bytesandbots 7y ago
    These constructs also helps people buy more expensive items than what they could afford without credit. I wouldn't jump to that conclusion just because it exists. Credit companies also take small fraction of the transaction. The store is willing to pay that fees because it increases their revenue.
    - krageon 7y ago
      If they can't afford it without credit, they can't afford it with. And vice-versa. There is no credit construction that will make this different, except if it has a negative interest rate. To me this is obvious because if they can afford the credit, they can afford to save.

atombender 7y ago

Many places offer interest-free deferred payment. For example, Design Within Reach, through Synchrony Bank, lets you pay in equal installments over 24 months (or less, if you want) [1]. APR around 20% kicks in if you go past the time limit. [1] https://www.mysynchrony.com/mysyf/paymentestimator.html?intcmp=designwithinreach-homefurnishingsstore-infobox-View_educational_materials-internal https://www.mysynchrony.com/mysyf/paymentestimator.html?intc...

bluedino 7y ago
Back when I was younger I bought about $1500 in furniture from Art Van on credit, and did not pay it all off within the 18 or 24 months Then I got smashed with a HUGE interest charge, they charge you ALL of the interest from the 18/24 months at the end of that time if you have a blance I buy $300 couches from the clearance center now, in cash.
- rubyskills 7y ago
  If you have the $300 in cash, why would you not put it on a credit card that earns you cash back or points?