Buy Now Pay More Later

16376_20100126Life unexpectedly will through you a curve ball financially from time to time. There could be a major appliance that dies on you. Your car could face major issues that need repairing in order to allow you to get to work. We can all imagine and come up with scenarios where we are faced with a financial fee we where not expecting. If you do not have some kind of emergency fund available to take care of repairs or other mishaps, you could find yourself in a little financial trouble. So what do people do in this situation?

Many department stores and service retailers will offer a buy now, pay later deal. This does exactly what it says, it allows you to buy what you need/want and months or years down the road then you start making payments or buy it outright. This kind of arrangement can help you out in the short term to allow you to get what you need but what is it really doing to your wallet? While this sounds like a good contract, what you really need to ask yourself is if you will infact be able to pay for it down the road.

People often make a misassumption that years or months from now they will be in a better financial situation where as often they are in the same as they are today. Knowing this and then being faced with an additional bill to pay in the future can be stressful. Anyone taking out credit for anything has to really ask themselves if they will truthfully be able to make the payments at a future date. If the answer is suspect, it may be in your best interest to avoid it if at all possible. When I say if at all possible, I mean ask yourself how necessary it really is. So often people think they “need” something where as in reality it is just a modern convenience that is not a necessity but rather a desire. While we all want a washer and dryer in our homes, a Laundromat can suffice to clean your clothes until you know you can pay for a washer and dryer.

Buy it now and pay it later often just means buy it now and pay more later. The money you are saving in the short term often just ends up being covered in the financing in the future. To see what the differences are, you can ask what the total cost of something would be if you purchased it all now or what the monthly payments would be once the financing starts. Be aware of this and if at all possible if you are faced with a big purchase, consider purchasing it outright from the start. You will then only be faced with the one bill you will not forget about and no surprises in the future.

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