I see these ads all the time on TV where I live, but I’m sure you’ve all seen something similar.
It’s one of those buy now/pay later things. Same as cash, no payments till 2001,usually it’s for furniture. And not very good furniture either. Everyone qualifies. I’m sure you’ve seen similar ads.
Now, I understand about the credit thing, same as cash, pay whenever. But if you can’t come up with all that cash on that day, they reserve the right to charge you an outrageous interest rate, retroactive to the day you purchased. Yeah, yeah, I get that part.
If you don’t pay in 2001, I assume they come and take back their crappy furniture. There’s the thing I don’t get. Surely by then the crap furniture has lost all value. I understand cars and appliances that hold some value but crappy furniture?
What am I missing?
No, I am not considering doing this, but when I see it I can’t help but wonder what I’m missing, usually I can spot the trick.
“Patriotism is the last refuge to which a scoundrel clings.” Bob Dylan
Credit is a game of playing the odds. You charge a rate that covers your expenses plus makes you some money. One of your expenses is deadbeats who don’t pay.
If someone doesn’t pay, you do your best to take back your merchandise, recover as much as possible, and wreck their credit so they don’t screw over someone else.
The situation you’re describing is actually a double-whammy.
Often you’re charged a high rate of interest from day one. When you finally get around to making payments, you’ve accrued quite a lot of interest; sometimes more than the original purchase.
Second, it’s a bait-and-switch. Often only the very best credit earns the no payments option; if your credit is less than perfect, well, “oh sorry, you should have read the fine print.” Now you’ve just spent an hour in the store, and they’re hoping you’ll just go with the regular payments rather than walking.
There are thousands of credit tricks that places will play on you.
One of the slimiest is one that a used-car dealer here in Denver plays:
They’ll sell you a car, make the deal and let you drive off. A couple days later, they call you up with a “problem” with your credit. You either need to cough up another $1000 down payment and accept a higher interest rate, or return the car and pay an exorbitant “rental fee” for the two days you’ve been driving it.
“Reality is that which, when you stop believing in it, doesn’t go away”. - Phillip K. Dick
It’s not legally a bait and switch so long as the “fine print” does appear in the ad. Which is why you see “fine print” on TV ads for everything from furniture rentals to maxi-pads. The real sucker bet of those rent to own places is that by the time you pay off the item you’ve paid about double the original price. Better to wait until you have enough money saved to pay it off at once, although if you do go rent to own and keep up the payments it looks good on a credit report.
You are dead on with that one. I’ve been on both sides of the car sales game so I know a few of the tricks, especially the ones to avoid. For that reason I arranged my financing with my credit union before ever setting foot on a dealerhip on my last purchase. I didn’t have to play the game. After negotiating the price the salesman said they would need my social security number and I simply replied that they didn’t. It floored him and he didn’t know how to respond because the script didn’t cover that. I explained that I did not want the dealershop to arrange financing and that was that. After writing everything up I said I’d be back in two days with a bank check to take delivery. he said he’d need a deposit so they could not sell the truck to somone else. Once again I was able to make his jaw drop. “No, you won’t sell it.” He knew I wouldn’t hesitate to go to another dealer. End of story. I felt like Obi Wan Kenobi using the force on a storm trooper.
*SingleDad: One of the slimiest is one that a used-car dealer here in Denver plays:
They’ll sell you a car, make the deal and let you drive off. A couple days later, they call you up with a “problem” with your credit. You either need to cough up another $1000 down payment and accept a higher interest rate, or return the car and pay an exorbitant “rental fee” for the two days you’ve been driving it.*
I had something similar happen to me twice. The first time, JKJ Dodge (related to Koons in the DC area) told me after a week that they needed another $500. I went in and told them that my insurance jumped up a lot with the new car (it did), so I didn’t have the money, so I guess they’d better take back the car. He went “to talk to the manager”, then told me they lowered the base price so that I could keep the car.
The second time, however, the trick worked. Rosenthal Mazda in Tyson’s Corner, VA is where I bought my latest new car. They would pay off my old loan, and of course tack it onto the new loan for the new car. They asked for an estamate on how much my old loan had outstanding. I said $9000. A couple of days later, they said that my credit union had said that there was $9300 left. I didn’t think much of it, since I had just made an estimate. I went in and gave them $300 more so they wouldn’t have to re-do all the paperwork.
But two months later I got my quarterly statement from the credit union. My loan payoff had only been $9006. So that SOB at Rosenthal Mazda tricked me out of $300.
Those are two places that I’ll definately never buy a car from again.
Wrong thinking is punished, right thinking is just as swiftly rewarded. You’ll find it an effective combination.
