7 ms·

If you can afford 12 payments with interest, you can by definition also afford to save for 12 months and then buy the camera. BNPL and credit card companies are

• yladiz 4y ago
  Okay, I repeat my question above: if you can afford to pay over 12 months (meaning, you don't go into debt to do so), what's inherently wrong with doing it instead of waiting 12 months and paying all at once, besides ideological reasons?
  • christkv 4y ago
    I think the argument is that its easy to get out of control and leave yourself exposed. If you have discipline then I don't see any problems. I might behov the industry to be forced to do more stringent credit checks before allowing it either by law or regulation.
    • Dalewyn 4y ago
      I have no sympathy for adults (important distinction!) who have no discipline with their finances. They aren't children who literally don't know better. Those who do have financial discipline should not be inhibited for the sake of those who do not. Besides, /most/ cases of financial ruin aren't literal death. They are generally just very expensive and horrible-to-go-through life lessons.
      • christkv 4y ago
        Sure but regulations are the to avoid them creating systemic risk by lending to dead beats.
  • kortilla 4y ago
    It’s financially reckless. What if you lose your job?
    • Ultimatt 4y ago
      You then pay off your outstanding debts if you think there is risk you will be paying out more in the near term... That's why you only carry debt when you could otherwise afford something. Literally thats the point. Realistically though its even better if you lose your job because you have the cash in the bank you would otherwise have sunk into an asset. I just quit my job to be self-employed and have a bit of a career break. Before I did I got a 24 month interest free credit card. If I suddenly have to pay for something really expensive like a new boiler or something, I can put it on there and I have two years to decide what to do, or get a job with zero additional cost. That's security more than it is a liability. I've had a perfect credit score and never paid for credit other than my mortgage interest. People who refuse to use credit out of some broken parental advice of "never carry debt" is far more reckless since you're ignoring an entire avenue of financial management for yourself. Absolutely don't carry debts you cannot afford. But everyone should abuse the fuck out of the credit system, and the institutions designed around fleecing people a lot stupider than you. The bar for credit company profits is set at people where money is like water through their hands, not people who know how to keep a personal budget in a spreadsheet.
      • kortilla 4y ago
        You can’t pay it off if you weren’t able to afford it up front. You’ve changed the scenario from “I can’t afford the full cost but can afford monthly payments” to “I can afford this and am using monthly payments as an interest free loan”.
        • Ultimatt 4y ago
          Go read what I said, the premise was you can afford the item outright but it still doesn't make sense to if you have interest free credit available.
    • Rebelgecko 4y ago
  • ivanche 4y ago
    If you take 12 payments you, by definition, are in debt! It seems you are conflating debt with net worth - a person can have positive net worth and still have debt(s). Even if it is 0% interest you owe money to someone. Every debt is a risk. It may be smaller or larger, but it's a risk. It also normalises the behaviour of going into debt for buying depreciating objects which is bad by itself.
  • arlcode 4y ago
    There is nothing inherently wrong with that but it's a lot more risky then saving up. Say after 10 months an unavoidable bill of $4k shows up and I got to pay it. If I'm saving up I can redirect that money. It sucks that I don't get the camera when I planned to but otherwise I'm fine. Under a BNPL plan I have no extra money to allocate and might have to dip into Credit (potentially with high interest). In short: Savings are fungible, payments are not. Studies show that huge percentage of the population doesn't have any savings. For them it's particularly dangerous to have more recurring bills.
    • pandaman 4y ago
      Your method is just as risky - say after you've just spent 5K on your camera an unavoidable bill of $4K shows up? Now you have no extra money and have to dip into Credit (potentially with high interest). Your best strategy would have been to have $5K on hand and still use financing if the terms are favorable - it keeps your funds at steady level, allows for future planning and gives you opportunities to invest or otherwise grow your capital. And yes, people without savings pay for that, it sucks to be such people but they are paying regardless if you take advantage of the financing scheme.
      • happyopossum 4y ago
        Then you sell the camera and pay off the bill. Sheesh - it's a camera, not a life support machine...
        • pandaman 4y ago
          I think you might be overestimating the liquidity of the used camera market a little bit.
          • Sakos 4y ago
            Does it matter? Even if he only gets half the price back, that leaves 1500 left of the debt he has to pay out of pocket. If he's paying monthly for the camera, he suddenly has a $4000 bill on top of whatever of the $5000 debt remains unpaid. I think I'd rather be in the former situation.
  • mozman 4y ago
    Always spend other people’s money, especially at 0%. The trap is it creates a mental pattern to condition you to accept paying interest on other purchases.
    • deleted 4y ago
      [deleted]
    • neon_electro 4y ago
      Well said, but I feel like practicing your first sentence makes it relatively easy to be good at avoiding the mental trap you describe.
  • epolanski 4y ago
    Paying in installments requires you to have a secure stable income. You may not have one tomorrow. You may lose your job. You may go through a divorce. Maybe you have to move for months because your house has been flooded. You don't know what your tomorrow's financials look like. The only time that it may makes sense to pay installments if if the interests are really 0% and you have lots saved anyway. At that point..why not improve one's credit score anyway.
    • e63f67dd-065b 4y ago
      > The only time that it may makes sense to pay installments if if the interests are really 0% and you have lots saved anyway. At that point..why not improve one's credit score anyway. BNPL providers typically provide 0% interest rates for longer that credit cards, which have 0% interest for anywhere from 3wks to 7wks (depending on when your statement closes relative to when the transaction settles).
  • chasd00 4y ago
    if you can get a loan at 0% interest it's definitely in your best interest to pay that loan back as slowly as possible. The longer you wait the less you effectively owe as inflation does its thing. I'm 46 and still paying on my student loan, the interest rate is so low that (even in normal times) inflation outpaces it. I'm making money by paying it back over decades.
• fleischhauf 4y ago
  while I agree I can also see cases where you need things not later, but now but you'll have the money later not now. e.g. moving to a remote village where you really need a car or buying that compute for data processing or rendering you need for your freelance work
  • ivanche 4y ago
    Yes, "need" is different thing. OP specifically wrote "want". Of course if it's a matter of life or death I would take credit.
• foldr 4y ago
  The tricky thing is factoring death into the equation. At some point, given that we all might die on any given day, delaying gratification to save a small amount of interest isn't worth the risk. But of course that's hard to calculate. Also, if you wait to buy something then you have less time to enjoy it, so it is theoretically worth a bit less to you.
• cjrp 4y ago
  If there's 0% interest, you might be better off buying the camera now rather than in 12 months when the price has increased.
  • ivanche 4y ago
    Fair, that could happen. It could also happen that the price decreases, as prices for electronics tend to do.
  • srmarm 4y ago
    You also get to pay off a real-world lower amount due to inflation. However for many (most? myself included) the reality is that easy credit like this does lead to over extending in the longer term.
• Ultimatt 4y ago
  Or you can afford the camera outright, right now. What's better out of these options: 1) Buy for cash the camera now. You don't have any cash in hand afterwards, and the camera is depreciating in value immediately as an asset only offset by whatever you do with it. 2) Buy via BNPL with no interest for 12 months, and pay exactly a 12th a month. You have the camera, but you also have 91% of your cash in the bank that /does/ get interest or can be used for anything else like investing in shares. You still have liquidity and can assumedly use the camera to generate some cash doing weddings or whatever as part of your hobby for one year. 3) Save cash where you are getting similar rates of interest as 2 for 12 months once you've identified you need something. Buy the camera a year after you needed it, you have lost the opportunity of 12 months revenue from maybe one wedding a month? The price is either affected by inflation after a year, or more hopefully its gone down due to competition with other models, but who knows. Also do you still need a camera? you've certainly lost out on a years experience to know if it was worth it. BNPL makes plenty of sense if you can or cant afford something, more so if you can.
  • ivanche 4y ago
    If we are to make up scenarios, I can take $5,000, go to a casino, observe roulette wheel and bet on black when I notice bias. Bam, I now have $10,000! I am the smartest guy ever! Seriously, OP never mentioned investing in a business equipment but wanting a camera. Also, that camera will depreciate no matter how you paid for it, but you conveniently mentioned it only in the scenario 1.
    • Ultimatt 4y ago
      Because I assumed you'd understand the depreciation of the asset is a lot less than the appreciation on your investments or cash that you can do in the other scenarios. The entire point is its offset. Also that's not a business asset description, thats just normal life??? WTF buys a camera and doesn't offset some of the cost doing their mates wedding? You're not thinking rationally if you think using the credit system is comparable to a roulette wheel. You control its use. You can just clear the debt if its interest free, its not grown or changed. The credit system is designed around returns for people who can't afford something at all. It's utterly predatory, but if you financially are entirely above the risk of paying interest its just a lot of flexibility in preserving your cash capital.
• iso1631 4y ago
  So I take a 10k loan out for 10 years for solar panels on my roof paying 12k in total, reducing my electric payments by 1500 a year. You think it's better to not. OK.
• olliej 4y ago
  Correct, you can always save indefinitely to get the required amount of money and pay for whatever all at once. The problem is that the above is assuming that there is no value to having the thing you want to buy. For example: a person might be able to save for 12 months to buy a new camera, but that's now 12 months they don't have that camera. Presumably you had reasons for wanting that camera. While there are a bunch of things I don't think it's ever good to go into debt for, your claim that there's no justification other than "I deserve to treat myself like a king" is BS. As per usual for articles like this they pose this in context of the extremes "sandwich in payments", which I suspect if people have done that it is accidental and/or "huh? what is this like".