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So, I went shopping at Raymour and Flanigan...which I guess is a regional furniture store that has higher prices on different brands of furniture. They have a lot of beautiful stuff - but of course things are marked up as usual.
Anyway, I am closing on my townhouse in August and have found a lot of pieces that I absolutely love there. When approached by a salesman last week, he said that I could create a list of things that I want, put them on hold, and them purchase them after I close on the house. He went through their 0% financing for three years pitch and I asked if I would get a discount if I just paid cash. He said that he could give me 10% off.
He then mentioned that he could offer me 10% off if I financed for 1 year instead of the 3. He said that the people the work above him are trying to do away with the 3 year interest free financing because they are losing a lot of money on it (I guess the bank accrues all the interest from the people that don't pay it off and not the store at all?). He said it would be smart to purchase my furniture and pay it off within the year.
Of course, the bank only wants a small, minimum payment each month so that eventually, when you reach the year - you still have a lot to pay off and get charged a ton in interest.
His advice to be was:
Figure out how much the monthly payment would be each month to pay the items off in a year. Only pay the minimum amount each month, but send the difference into a bank account that is used only for the furniture payments. When the year is up, pay the furniture off in one lump sum. This way - you have a small emergency fund set up in case something happens...but then you have the option to pay the whole thing off in a year as well.
I think I would feel more comfortable just paying the maximum I can every month to pay it off as soon as possible...but I thought his advice was interesting.
Anyway, I am closing on my townhouse in August and have found a lot of pieces that I absolutely love there. When approached by a salesman last week, he said that I could create a list of things that I want, put them on hold, and them purchase them after I close on the house. He went through their 0% financing for three years pitch and I asked if I would get a discount if I just paid cash. He said that he could give me 10% off.
He then mentioned that he could offer me 10% off if I financed for 1 year instead of the 3. He said that the people the work above him are trying to do away with the 3 year interest free financing because they are losing a lot of money on it (I guess the bank accrues all the interest from the people that don't pay it off and not the store at all?). He said it would be smart to purchase my furniture and pay it off within the year.
Of course, the bank only wants a small, minimum payment each month so that eventually, when you reach the year - you still have a lot to pay off and get charged a ton in interest.
His advice to be was:
Figure out how much the monthly payment would be each month to pay the items off in a year. Only pay the minimum amount each month, but send the difference into a bank account that is used only for the furniture payments. When the year is up, pay the furniture off in one lump sum. This way - you have a small emergency fund set up in case something happens...but then you have the option to pay the whole thing off in a year as well.
I think I would feel more comfortable just paying the maximum I can every month to pay it off as soon as possible...but I thought his advice was interesting.
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