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It isn't. I financed my phone for free via Klarna. I could easily pay it at once but why would I. In the end I save a bit because of inflation.
by BadBadJellyBean 3y ago
It isn't. I financed my phone for free via Klarna. I could easily pay it at once but why would I. In the end I save a bit because of inflation.
- vdaea 3y agoUnless either your salary or the price of the phone increased in those months, you didn't save anything.
- TheNorthman 3y agoHe can't predict the future. The relevant metric must be 1. The chance, weighted by amount, of a price hike/salary increase 2. The chance, weighted by amount, of a price decline/salary decrease. As inflation is generally an upward trend, clearly no. 1 is more likely and thus the best bet.
- chmod775 3y agoAnother advantage of financing even though you would have had the money on hand is that you have more liquidity/the option of doing something with that money in the meantime. Also someone may have some assets they could turn into liquid cash if I really needed to but may not have a lot of liquid cash on hand, so there would be little risk in paying something in installments as long as their assets would be enough to cover it in a pinch.
- archi42 3y agoWhile liquidity is a reasonable argument, I only know this from "rich people doing things/investments"; e.g. not selling shares in your company when building a new house, or a company building a warehouse. I am not sure it actually applies to the cost of a phone. Chances are, if those matter, you'd be better off with a cheaper phone to begin with. (Substitute phone with other luxury articles).
- globalise83 3y agoThe price of the phone and the installment amounts are fixed at purchase. If there is a positive inflation rate you are guaranteed to make a real saving (but not a nominal one) by paying some of the purchase amount later on. What happens to your salary or the price of the phone later has nothing to do with it.
- dmurray 3y agoOr if there was literally anything else he'd prefer to buy up front than wait until he'd saved up enough to replace the cost of the phone.
- AlexandrB 3y agoJust by keeping that money in a savings account you'd save something.
- josefx 3y ago> I financed my phone for free via Klarna So how do they make money? Sounds like they would be losing money to inflation by offering that service for free.
- vdaea 3y agoThey make money because they know that if you need to use Klarna to finance a €300 purchase you are very likely to default on the loan and pay interest.
- deleted 3y ago[deleted]
- chmod775 3y ago> So how do they make money? Generally the logic on "free" financing by the seller is that without it, they may have not made a sale at all. Sure it cuts into their margins, but offering rebates would have had a similar effect. Klarna probably still charges the vendor a few bucks for handling the thing.
- steveklabnik 3y agohttps://www.bitsaboutmoney.com/archive/buy-now-pay-later/ https://www.bitsaboutmoney.com/archive/buy-now-pay-later/
- purpleflame1257 3y agoBad at dealing with money isn't necessarily true. Better to say "has outstanding financial obligations."