Today's Rant - Five Years, No Interest

[Iron Chef]

I spent a good deal of time in the garage this past weekend and had the stereo on. Of course, various retailers were advertising all these "great deals" and so on. And I noticed that they are now offering "no interest for five years" on items like mattresses, furniture and so on.

FIVE YEARS??? Can you imagine locking yourself up in a furniture purchase for five years?

Are we not empowering people to buy more crap that they can't afford buy offering terms like these? I mean come on...didn't anyone learn anything from the Great Recession? (which we're still in, by the way).

I'm done now. Sorry...I slept poorly.

[wwomanC6]

I guess you did have a lot on your mind!

[Iron Chef]

Originally Posted by wwomanC6

I guess you did have a lot on your mind!

It's a small mind, so I have to get things out quickly to make room for other things.

[Mr Hole]

I'm rather partial to the all cash down and nothing a month for the rest of your life plan.

[Defib1961]

It's the American way. Go in debt with stuff you can't afford, die, leave the debt to someone else to pay.

[BuckyThreadkiller]

I'm thinking the financing outlives the furniture.

[Z06PDQ]

Originally Posted by Mr Hole

I'm rather partial to the all cash down and nothing a month for the rest of your life plan.

it took a while, but that's where I'm at.

[1TZSLO]

Originally Posted by Mr Hole

I'm rather partial to the all cash down and nothing a month for the rest of your life plan.

[Y2Kvert4me]

If you go finance a new mattress set, you just might sleep better.

[Joecooool]

You think no interest is bad? The furniture stores in Miami offer no interest OR PAYMENTS for two years. Before you make your first payment on the furniture its already two years old.

Thats how you sell a $200 couch for $800.

[NEVRL8T]

Originally Posted by Joecooool

You think no interest is bad? The furniture stores in Miami offer no interest OR PAYMENTS for two years. Before you make your first payment on the furniture its already two years old.

Thats how you sell a $200 couch for $800.

Does a hooker come with the couch?

[09CTSV]

No just the

[Munch]

5 years of making payments on an $800 couch would be a serious nusence. I would pay $1,000 cash just to avoid mailing 60 checks for $13 and change.

[Night Train]

Wonder if that would entail a hefty interest charge if not paid off within that 5 year period.

More likely, as another poster mentioned, what they are selling is worth maybe $200 but they sell it for $800. Sooo....the "free interest" is just BS. They'll get their interest one way or another.

[vettex2]

as long as you pay off the loan before the interest is due , you can make a whole 1% in a savings account

[Iron Chef]

I think people might be missing the point of my thread: By offering these terms which were previously unheard of, are they not encouraging people to spend money they don't really have? Isn't that what got the country into this mess in the first place?

[Defib1961]

AAahhhhhhhhh, you mean we actually have to PAY for it?

[Y2Kvert4me]

Originally Posted by Iron Chef

I think people might be missing the point of my thread: By offering these terms which were previously unheard of, are they not encouraging people to spend money they don't really have?

I doubt it.

1. There is is nothing inherently wrong with using someone else's money for 5 years, free of charge. The very smart people often take advantage of that even if they don't need to, that is, "all else equal" (to address Phil's point about retail price differences to cover it).

2. You have to qualify for that loan.
As you might know, lenders have radically tightened up their approval requirements, so it could be said that if you can't afford it, you won't be realizing those terms, because you'll never qualify for that loan to begin with. Ad hype brings people into the store, that doesn't mean a guaranteed done-deal with the bank.

3. Everyone is trying to find a way to get consumers buying again. It IS what drives our economy. Most reading this may have never stopped buying goods, but that's not an accurate portrayal of the country as a whole either.

Not everyone has $1500 in cash to drop on a new mattress set, (and if they did, would it be their priority as to how to spend it?) but the vast majority could swing a $20 monthly payment. Sure, the tactic entices people (who otherwise wouldn't) to buy, but claiming affordability is a totally different thing. The lender will have to determine that to their satisfaction prior to financing them.


Since you didn't post all the tiny print details about this 5 year no interest deal, these are the conclusions I arrive at.

[Z06PDQ]

anytime they make a deal like that they mark the price of the item up to cover the $$ they lose on financing. car dealers are famous for it.

[Me2]

Originally Posted by Z06PDQ

anytime they make a deal like that they mark the price of the item up to cover the $$ they lose on financing. car dealers are famous for it.

Most of that stuff comes from overseas and is cheap as hell for those companies to purchase in bulk. Don't they make you put a down payment on it, like 20% or something to cover the taxes and their actual cost? Then if someone actually does make all of the payments, they make a lot of money - way more than what they lose from the people that don't pay. And a lot of people wouldn't make the payments - what's a company going to do with a repossessed mattress?