Salty Sea Dog said..
These guys are doing a take home lay-by kind of thing on Firewires. 25% deposit and then $30 a week, no interest (according to the ad).
Handy if you don't want to wait until you've saved enough for your new stick..... and you want a Firewire.
Smoke and mirrors. Do some quick math. The effective interest rate is capitalised into the payments.
FST Vanguard = $935.
Pay upfront $243.10 = 25.98%
Pay $32 a week for 6 months or 26 payments = $832.
Total board cost = $1,075.10
Difference / original * 100 will give you the % change in price.
(1075.1-935)/935 = 14.9
or 14.9% more expensive - but this is really an annualised return - not over 6 months as the advertisement states. So really its closer to 30% interest.
I would be happy to lend money at 30% any day of the week. They will be smoking it in. The cool thing here is that the finance company is probably taking 25% and the retailer 5% of this plus the retail heavy margin on the board - there would be no discount if you are financing it. Everyone is a winner except the mug who finances a depreciating asset at such rates.
If you really want one go and see a bank and get a personal loan at something closer to 14%. Yes you probably need to pay a bit more for a loan as the amount you are borrowing is so low (paper work is still similar) but an effective loan rate of 30% is highway robbery.
Most shops would probably give you at least 5% off retail for a Firewire anyway - maybe 10 if you ask nicely. Even at 5% you are getting your board $46.75 cheaper. So if you borrowed money at 14% and paid cash the board would cost you approx. $950.43 over 6 months. A significant savings over the $1,075.1 it would cost you under their scheme.
Now if anyone needs some financing on a Firewire - give me call and lets talk some terms - at 30% I have a lot of cashola to lend
