Is buying goods on credit a good idea?

Do you want a new television?

How about some new furniture? I know you want a new car! Well if you are anything like me, those are things you might want but are unable to afford.

The problem is of course that every magazine or television advertisment I see, there are companies promising that I can purchase those items if I take them on credit!

In fact, this time of the year, consumers are literally overwhelmed with constant invitations for them to purchase items on credit and pay 0% down until 2015!

It sounds attractive doesn’t it?

After all it makes perfect sense to take what you want now and simply pay later. The situation might seem ideal for the present, however there is a very pressing question that must be considered, ‘Can you repay the debt’?

Credit Problems

Qualifying for credit is not very hard to do, it usually involves producing collateral, job slips, proof of address, credit history and guarantors.

After you have received the item, then the problems can arise.

It can be difficult to find the extra funds to pay the monthly payments. If there is an emergency and the funds are diverted then consumers might find it difficult to repay their debt.

There is also the interest payment to be considered. The interest on the loan will increase the overall price of the item. That means that by the end of the loan repayment you might have paid twice or in some cases three times what the item really cost.

The item can also be repossessed if you stop payments which can be really terrible as all that money you had paid over the few months would be gone as well as the item you wanted.

I suppose the only good thing about buying an item on credit is the instant gratification that comes from getting something you always wanted but could not afford.

My advice is to save your money. There are countless saving programmes that offer good yields on your investment. Then when you have enough to buy the item with cash, there are no pesky repayments to consider.

What’s your take? Should you take credit or save for items you need? Let me hear from you!

Teri Ann Renee Paisley

Gleaner Online Writer

Tags: credit