When buying on installment you incur a debt that you will pay off in installments.
In addition to the debt, you also pay one every month share interest, buy on installment always means that you end up losing more money than if you first saved the money together.
Many people opt for installment payments when large amounts are involved. This can be amounts for a car, a new bathroom or kitchen or the interior of the house. These are things that you will enjoy for longer and that are therefore also worth buying on installment.
For smaller amounts you can also opt for installment payments. It can happen that your washing machine, fridge or freezer collapses and you don’t have the money to buy a new one at that time.
It becomes less obvious when you start borrowing money for a wedding or holiday. You will then be paying for something that is ultimately just a reminder. In this case it is really better to feel that you have saved up the amount in advance.
Advantages of installment payments
You do not have to wait to purchase a product. You can proceed to purchase immediately, this is a very important advantage in particular for replacing necessary goods.
Disadvantages of installment purchase
The high costs, in other words the interest that you have to pay back on top of the purchase price.
The term you are tied to. You often have to repay months, sometimes even years, in installments plus interest to pay your debt. Due to unforeseen circumstances such as illness or unemployment, your income can be greatly reduced and it can also happen that you will suddenly be faced with unexpected costs in the long term. In those cases it can become difficult to meet the periodic payments.
When you choose to buy on installment, consider carefully whether you really need the product. For a gadget you can really better save first. It is handy that you can use installment purchase for large amounts or in an emergency, but in all other cases it is better to control your impulses and opt for saving.