Especially with expensive devices, some buyers use the option of paying in installments, large electronics stores even offer zero percent financing. At first glance a great offer – but does that have any disadvantages for the consumer? TECHBOOK asked a lawyer.
Simply pay off the new television, the long-awaited iPhone or another electronic heart’s desire monthly – and without any interest at all: zero percent financing is tempting, especially if you’re short on cash. This form of installment payment obviously has a very big advantage. TECHBOOK also spoke to the lawyer Christian Solmecke about possible disadvantages.
What speaks for zero percent financing?
- Larger purchases are also possible without savings: The washing machine breaks down and there is hardly any money left in the account? In such a case, the zero percent financing can make it possible to buy a new device – and without incurring any interest. Stefanie Laag from the NRW consumer advice center says: “Temporary financial bottlenecks can be bridged or profitably invested capital does not have to be attacked. Zero-percent financing can be completed quickly and unbureaucratically, but it is also often thoughtless – which makes the contractual obligation appear much more harmless than it actually is.”
- Duration and rates are partly flexible: Especially with large electronics dealers, customers can decide on the contract period and the associated rate. That way you don’t tie yourself to fixed costs for years.
Tip: Do you have a fixed-term employment contract? Then it may be advisable in your case to adjust the term of the loan accordingly.
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What speaks against zero percent financing?
- Limited right of withdrawal: Even buyers with zero percent financing contracts can revoke this within 14 days and claim the money back. However, this is not possible if the agreed loan amount of 200 euros is not reached.
- Additional costs. Before you buy, you should definitely compare offers. “The supposedly saved costs by waiving interest are otherwise passed on to the customer,” says attorney Christian Solmecke to TECHBOOK. Hidden costs could also come from a higher selling price or due to bank processing or account fees.
- Two contractual partners: With zero percent financing, buyers always have two contractual partners with the dealer and the bank. Banks have an advantage with this deal even without interest income: they get valuable information. “Your data is also passed on to a bank and you may have to reckon with further advertising measures,” says Christian Solmecke.
- The contract runs longer than the device lasts: In case of doubt, it can happen that the customer already buys a new device although he is still paying off the old electrical device. Find out in advance about the longevity of the devices and upcoming technical innovations.
- Inconsiderate consumption: “Financing offers without interest also tempt to ill-considered consumption. There is a high risk of buying more than is financially affordable or needed at the time,” he explains Federation of Consumers. Expert Solmecke advises anyone who cannot keep the contract in the long term should forego financing.
Several contracts lead to financial difficulties
“Even several small installments for cheap or even interest-free loans can lead to payment problems, especially with low income. If the installment payment means that the overdraft facility has to be used more frequently, the supposed zero percent interest quickly turns into expensive fun,” explains Stefanie Laag from the NRW consumer advice center to TECHBOOK. Anyone who can afford the electrical device directly should prefer normal cash payment and refrain from zero-percent financing.