I've had a lot of questions asking me how I do 0% interest
financing. This post is about how I make
it work for me.
I view this type of financing simply as a tool to help me easily get
the things I need, and sometimes want, while keeping my savings account intact.
Taking advantage of interest free offers isn't as risky as it once
used to be, but you still need to be careful.
Know the terms and know when the offer ends and what the interest rate
will be if you don't pay it off before the no interest period ends. Remember that not paying it off before the
interest free period ends pretty much defeats the purpose of zero interest
financing.
The key to making this work is two-fold.
1. Make sure the payment fits within my monthly
budget.
Before I make a purchase I
consider the offer. How long is the
interest free term? Then I take the
final purchase amount and divide it by the length of the term to see how much I
need to pay each month to make sure it is paid in full before interest kicks
in.
If that fits in the budget,
then I go ahead with the idea that I will also pay extra each month so it is
paid off earlier. I am always more
comfortable if I can pay off a loan well ahead of its due date. Paying more than the minimum payment is always
a good idea, interest or not, and helps raise your credit score too.
2. Make sure I don't get carried away and over
extend myself.
One thing I am very careful
about is not to take on a new loan, tempting as that may be, before I pay off
the last one. Another good reason to pay
extra every month and pay things off early.
I also like to make sure I
have enough in my savings account or emergency fund to cover a payment or pay it
off if I need to. Anytime I can keep my
own cash while using someone else's is good for me. As long as I am smart about it.
The biggest reason I take advantage of 0% interest offers is
because I am able to acquire things while I keep my own money in my savings
accounts. I have used these offers
multiple times to purchase appliances, furniture, home improvement supplies for
big projects, my daughter's braces and most recently my car.
I hope this helps clarify things a bit. If you have more questions I am happy to
answer them. I'll do another post soon
about how to use zero interest credit card offers to pay off debt.
I love your blog. I have learned so much from you about saving and being thrifty. Will you please do a post on how to buy a car? I am newly divorced, and have never bought my own vehicle.
ReplyDeleteThank you Nancy! You can check out how I bought my car.
DeleteCopy and paste this in your browser and it will take you right to that post.
http://thriftymominboise.blogspot.com/2015/12/my-big-project-is-finally-complete.html
Feel free to email me if you have questions.