Legal Guide

Interest-free installments for the furniture: what you should know about it?

Often you see ads in which it is proposed to buy goods in interest-free installments or take out a loan at zero percent. How does this system work? Is it really possible to buy a product and not overpay? Is it generally profitable to take out a loan in a store?

Installment plan without overpayment?

However, often buyers do not understand that they, in fact, have entered into not only purchase and sale agreement but also a loan agreement with the bank. In the future, this may become a problem.

This can cause financial losses, in particular, in the case of the return of the goods, since the termination of the sale and purchase agreement and the return of money do not terminate the buyer's obligations as a borrower to the creditor bank. Thus, in case of refusal from the goods, the buyer needs to properly formalize the repayment of the loan, including paying the bank for the actual time of using the loan and other payments stipulated by the loan agreement.

So, an installment plan is the same loan, which means that obligations to the bank that cannot be canceled just like that. In general, the installment plan is beneficial for both the buyer and the seller. The ability to buy goods without overpayment in installments makes the goods more accessible to the buyer. The seller benefits from increased sales.

It turns out that the bank, in fact, charges interest on the loan issued to the buyer. It's just that these percentages are already included in the price of the goods. It turns out that the loan is still not interest-free in fact.

Read the agreement carefully and study the conditions on which the loan is granted. You can save a lot if you repay the loan ahead of schedule. pay a lower percentage.

Most often, this scheme is used by shops of household appliances, furniture, fur products and building materials. They also benefit from the fact that the price of goods in such stores can be initially overstated. At other points of sale, a similar product can be 10-15% cheaper. Another important point that customers need to take into account is that in order to obtain benefits, managers in stores are often aimed at selling additional services that they, at times, very persistently offer.

Imposing services in the store

When making an installment plan for household appliances, they can offer, for example, insurance from a bank against job loss or some kind of additional guarantee from a store. In this case, for an additional fee, which can reach 15-20% of the cost of the goods, the client can get the opportunity, for example, to double the warranty period for his purchase.

It should be remembered that the buyer always has the right to refuse additional services. Sometimes the need to purchase additional services really becomes an essential condition of the contract, without which installments are not provided. You need to carefully study the conditions of the promotion. It is important not to fall for the tricks of managers, who sometimes wishful thinking and simply mislead customers.

Bank tricks

Installment is 80% of the volume of all loans issued directly at the points of sale. In general, there are a number of other nuances in the POS-financing sector that are useful to know about.

A common violation of banks in the field of POS-financing is that the client is untimely informed about his debt. As a result, there are growing amounts of interest and fines, and credit history will be damaged.

There are also cases of incomplete or incorrect informing the client about the terms of contracts. For example, when applying for a loan, a buyer may not pay attention to the clause contained in the agreement that, upon signing the agreement, the bank has the right to issue a credit card to the client (with a service fee).

In addition, very often the consumer is misled about who his actual creditor is. Instead of bank loans, sometimes buyers receive loans from microfinance organizations, and they have slightly different repayment conditions and penalties in case of delay.

Useful Tips

Here are some tips to help you save money:

  • some sellers deliberately inflate the cost of goods, so compare prices in different stores;
  • think about the feasibility of purchasing additional services. Your refusal from additional insurance, as a rule, will not affect the provision of installments, because the store still needs to sell the product, and the bank will not refuse you if you have a good credit history;
  • read the purchase and sale agreement and the loan agreement very carefully;
  • the installment plan is the same loan, so do not delay payment,
  • if you want to return to the store the goods purchased in installments, you need to correctly arrange the early repayment of the loan, otherwise, the bank may charge penalties and fines.

For a secure interest-free installment of the furniture, we can advise you Nyfurnitureoutlets that uses Affirm that makes all process easier and more comfortable for you.


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