I've been discussing with the wife and she's agreed to let me get a 65-70" high-end 4K TV this year, so the journey begins.
I'm just curious as to whether the 5 year interest free deal is actually worthwhile in the long run? If I'm spending ~$4-6000 (also looking at getting an entertainment unit at the same time), then with the $25 establishment fee and $4.95 a month fee, is it worth it, or should I just pay upfront?
If I pay upfront I'll get 7,500 Qantas points.
Put it this way:
assuming you have an interest savings account on the low side. thats 3%/year your making holding onto the money.
eg 50000.03 = $150 you make each year you hold onto it.
less 4.9512 =59.40
= 91.60/year
less the $25 establishment
over 5 years adds up to $433 to you.
vs
7500 qantas points * 0.7cents a point at better than average exchange = $52.50 to you.
Net benefit of the interest-free assuming you have declared all terms: $380.50
Just don't miss the payback date or you will lose all the relative pocket money.
3%/year your making holding onto the money.
Except pesky ol' inflation is clawing most of that back :|
All my savings is in a 100% offset for my homeloan, so technically saving ~5%/annum
Ask if they can do a better deal if you pay up-front rather than taking finance and then decide. Don't forget that interest you earn is also taxable at marginal tax rate. So you deduct the relevant tax off any bank interest you earn. Might work out better if you have a mortgage offset account e.g. I'd essentially be saving 3.92%.On the value.
Do you pay the balance off monthly, or pay it in full at the end? If it's monthly then the savings are less worthwhile on the interest free.
I think it says monthly payments.
Normally with these interest free deals the interest payments are built into the price of the product and you'll find that they won't knock much, if anything off the RRP.
You can rest assured I'll be making sure i get the best price, regardless of payment method.
Harvey Norman doesn`t ask for payment method until you go to register. I am sure you could negotiate and get vetter deale even if you go for finance.
You pay more for interest free
but if you're strapped for cash up front, I tend to find paying an item over 5 years is fine
although cash is king
Well that article seems to suggest that keeping the cash in my anoint working against my homeloan interest is the better option. Thanks
A year later, just want to thank you for linking such an exact and informative article.
4 more years later… the link doesn't work :'-(
In some cases people find paying a set amount easier then saving.
I have done this in the past wjth some big house hold items and worked out well.
Yeah thanks, I've figured out that the monthly fees work out to be the equivalent of about 1-1.5% interest for the total purchase I'd make, so therefore it's a bit of a no brainer to put it on this instead of paying upfront, given my savings account is 100% offsetting my home loan with an interest rate of 4%.
If you think about it its like a layby. No interest is put on unless you go past the due date but if planned correctly its a simple process.
The only thing you might pay from memory is the account fee which is 4 bucks a month.
$5 now and establishment fee of $30
Yeah ok so it isnt bad still.
I would do this but you juat have to be happy with the purchase you have in 5 years time or less when you pay it off.
I thought the interest free deals you can't bargain the price, so you pay rrp.
You're a sucker if you can't negotiate a price.
I meant the interest free off is only on full rrp, not available if you get a discounted price.
I have never been able to knock the price down.
You just need to know how to talk and be in control of the negotiations but dont be arrogant and keep a friendly relationship.
Dont expect a lot off and what you can get just accept if you are purhasing regardless.
It's just a credit card debt they're giving you essentially. It's not Harvey Norman's own credit either, it's a GO Mastercard. So given they're separate entities there's no reason why the price can't be negotiated.
Unless you have a salesman that thinks he can get you to pay more… but I reckon he'd pick and choose who he plays that card on otherwise he'd miss quite a few sales.
I think that it's a much better option than paying by cash ONLY IF you can't get a considerably better deal by not using interest-free.
That 4-6k you are not using on the TV could be used to save more $$$ by putting into your higher-interest loans such as Credit Cards/Car Loans/Home Loans.