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Old May 5, 2013, 09:43 PM   #1
aooga12
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About to make a move on a refurb 13", have a financing question

I have $700/$1058 needed. I was thinking why not apply for the credit card and do the 12 month payments? I can get the $350 difference over the summer easy, and rack up some credit by the end of the payment period? Only about $88 per month, which 700 would cover about 8/12.
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Old May 5, 2013, 10:39 PM   #2
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If you don't have the money to pay for it all right now I would wait until you do. Just my thinking.

If you can get the $350 difference by the end of summer you might even save a little $$. 2012 refurbs. should drop in price a little once the 2013 models are out, right? Or you might even be able to pick up a refurb. with better specs than you could get right now for about the same price..
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Old May 5, 2013, 10:56 PM   #3
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Financing from whom?

You're not going to get approved, or at least a high enough credit limit, if you don't already have a good credit score and/or some type of regular income.

I'd just save up and pay it in full.
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Old May 6, 2013, 12:16 AM   #4
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Disagree with those 2. If u quality for such 12-month, NO INTEREST plan why not? There's really nothing to loose EXCEPT they say if you have too many of those CC, they lower your credit score. 1-2 should be OK. You pay full in 12 month, there is no interest charged, but you have to be diligent on paying each month. If u let it slip and just pay the minimum, it piles up easy.
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Old May 6, 2013, 08:04 AM   #5
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No interest loans are great, as long as your disciplined enough to pay them off. They count on enough folks not paying off and collecting the substantial interest payments to make money.

The Apple store offer is basically for a credit card and, if they approve you, go for it. Nothing to loose.
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Old May 6, 2013, 08:44 AM   #6
aooga12
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didn't get approved, oh well
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Old May 6, 2013, 08:59 AM   #7
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didn't get approved, oh well
Consider yourself lucky. It's considered a bad practice to borrow money to buy depreciating assets.

Patience! Wait until you can make the purchase in cash.
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Old May 6, 2013, 09:30 AM   #8
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Consider yourself lucky. It's considered a bad practice to borrow money to buy depreciating assets.

Patience! Wait until you can make the purchase in cash.
i didn't know that if what i buy is deprecating that it's considered bad?
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Old May 6, 2013, 10:30 AM   #9
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i didn't know that if what i buy is deprecating that it's considered bad?
Because you are (potentially) paying extra to buy something that will lose value. Makes no sense to pay money to lose it! On the other hand, borrowing to buy something that will potentially rise in value can be a good thing.

So if you have a way to make money using a computer (computer generated income less depreciation is a positive value), borrowing in order to buy it makes sense. If it's just to have a new toy, then no.

Invest wisely!
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Old May 6, 2013, 12:24 PM   #10
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Yeah dude, those financing are for people with a certain credit history, not everybody. As the joke goes, they only want to lent money to those who HAVE it.
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Old May 7, 2013, 03:30 PM   #11
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Save for it. If you cannot pay for it, keep saving until you can.
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Old May 7, 2013, 06:00 PM   #12
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Consider yourself lucky. It's considered a bad practice to borrow money to buy depreciating assets.

Patience! Wait until you can make the purchase in cash.
If that were totally true the new car industry would go away.
The OP got turned own because of either bad/slow credit or no credit.

If one can afford the payments, interest free financing makes total sense.
The cost of the money is FREE, why pay upfront for it,when you can pay over time...money is pretty much always worth less in the future.
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Old May 7, 2013, 06:31 PM   #13
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If that were totally true the new car industry would go away.
The OP got turned own because of either bad/slow credit or no credit.

If one can afford the payments, interest free financing makes total sense.
The cost of the money is FREE, why pay upfront for it,when you can pay over time...money is pretty much always worth less in the future.
The risk here, and what they are betting on, is that you will be late for a payment. Then everything retroactively reverts to a high rate and you get charged a late fee as well. Also, borrowing the money reduces your potential to get credit for when you really need it.

I'd prefer to pay cash and sleep easy. And that includes car purchases. These can be particularly ugly because, even with 0% you are immediately "under water" in a position where you can't even sell the car if you get into financial straits.
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Old May 7, 2013, 10:37 PM   #14
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I'd actually have to disagree with the concensus here, in that I think financing things like that can be a good idea. Paying cash for everything will not help you build up credit, even if it is buying a depreciating asset. It is of course true that you don't want to get in over your head with these types of purchases, but the OP said he had something like 75% of the needed money. What I would have done is put that $800 aside in an account or an envelope, financed it, then drawn the monthly payment out of that money I put aside, adding in a little each month to make up for what he'll be short at the end. I did things like that all the time when I was younger, and my credit score is now 810
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Old May 7, 2013, 11:16 PM   #15
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I expect the OP would have to get a high-interest credit card. Paying that in full every month will build up a credit score without paying interest. Then he would be able to qualify for a 0% rate purchase.

The good deals require well established credit. Meanwhile his best bet is to save up the money, buy the Mac on the credit card, and pay it off immediately!
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Old May 8, 2013, 06:22 AM   #16
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Is this true for even a car and a number of homes? Just wondering
Quote:
Originally Posted by talmy View Post
Consider yourself lucky. It's considered a bad practice to borrow money to buy depreciating assets.

Patience! Wait until you can make the purchase in cash.
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Old May 8, 2013, 09:36 AM   #17
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Is this true for even a car and a number of homes? Just wondering
Homes will pay off given enough time for market fluctuations to smooth out. I certainly believe them to be good investments if you tend to stay in the same place for many years.

I don't believe in car financing. Only rarely does a car appreciate (low volume models with high demand may appreciate, as may collectors cars, but we are talking about those). Not only does car financing cause that very risky "underwater" situations but people tend to buy based on the monthly payment rather than looking at the total cost of ownership. I think if people looked at TCO there would be far fewer new cars sold!
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Old May 8, 2013, 11:19 AM   #18
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Originally Posted by aooga12 View Post
I have $700/$1058 needed. I was thinking why not apply for the credit card and do the 12 month payments? I can get the $350 difference over the summer easy, and rack up some credit by the end of the payment period? Only about $88 per month, which 700 would cover about 8/12.
I'd like to throw my hat in with the people saying that financing a computer is a terrible investment.

I know it's not what you want to hear but if you didn't get approved then you either don't have enough credit or you have bad credit - both of which should serve as a warning against making a purchase like this on credit!

presumably you're young so i would get in the habit now of paying cash for things that aren't either a good investment or something that you HAVE to have. Generally a new computer is neither of those things.

Look at it this way, if you spend the next 6-12 months saving up you will never regret it - you might if you buy it now and miss a payment or something else comes up. More importantly, that same device you are looking to purchase now will have drastically depreciated in price so you can either get it for less money or get something better.
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Old May 8, 2013, 11:39 AM   #19
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Originally Posted by arbogast777 View Post
I'd actually have to disagree with the concensus here, in that I think financing things like that can be a good idea. Paying cash for everything will not help you build up credit, even if it is buying a depreciating asset. It is of course true that you don't want to get in over your head with these types of purchases, but the OP said he had something like 75% of the needed money. What I would have done is put that $800 aside in an account or an envelope, financed it, then drawn the monthly payment out of that money I put aside, adding in a little each month to make up for what he'll be short at the end. I did things like that all the time when I was younger, and my credit score is now 810
You don't have to carry a balance to build up credit. If this guy was rejected for a 1k credit then he either has no or terrible credit - either way getting a card and then filling it up will hurt his credit score and make getting the next loan (one he might actually need) more difficult and/or costly.

best thing to do is get a low interest low limit card from your bank or credit union and pay it off every month. save up for the computer or other big but manageable purchases and either pay cash or put it on the card and pay it back without carrying a balance the next month.

A great way to do this is to only put monthly expenses on the card - internet, power, phone etc and pay them off each month. expenses that don't change. everything else should be cash - including food and computers.


just my advice based on not following any of this when i was younger despite knowing then and now that is precisely what I should have done ;-p

FWIW i am 32, 2 kids, just at 6 figure total household income, house, 2 paid off used cars, 830 credit score.
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Old May 8, 2013, 01:44 PM   #20
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We pay off our credit cards every month, and still they increase our credit line, despite us not even using 1/2 the limit. We have not carried any balance for years.
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Old May 8, 2013, 01:49 PM   #21
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830 credit score.
Show off.
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Old May 8, 2013, 02:18 PM   #22
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We pay off our credit cards every month, and still they increase our credit line, despite us not even using 1/2 the limit. We have not carried any balance for years.
Same here, but I've called them to have our credit limit reduced so if I really needed credit for a major purchase I could get it (and not at credit card rates!). Helping things out, our credit cards all have "auto pay" of the full balance so I never have to worry about missing the payment.
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Old May 8, 2013, 05:41 PM   #23
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Same here, but I've called them to have our credit limit reduced so if I really needed credit for a major purchase I could get it (and not at credit card rates!). Helping things out, our credit cards all have "auto pay" of the full balance so I never have to worry about missing the payment.
We called them a year or more ago and got them to reduce the credit limit...then 6 months or so later..they increased it again. sheeesh
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Old May 8, 2013, 06:00 PM   #24
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Show off.
hehe, believe me it's about 150 higher than it was 10 years ago
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Old May 8, 2013, 06:05 PM   #25
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Disagree with those 2. If u quality for such 12-month, NO INTEREST plan why not? There's really nothing to loose EXCEPT they say if you have too many of those CC, they lower your credit score. 1-2 should be OK. You pay full in 12 month, there is no interest charged, but you have to be diligent on paying each month. If u let it slip and just pay the minimum, it piles up easy.
Never, ever pay just the minimum amount required. Always pay as much as you can. Rule of thumb: if you won't have it in your account my next paycheck, DON'T BUY IT!!

Quote:
Originally Posted by ColdCase View Post
No interest loans are great, as long as your disciplined enough to pay them off. They count on enough folks not paying off and collecting the substantial interest payments to make money.

The Apple store offer is basically for a credit card and, if they approve you, go for it. Nothing to loose.
Silly question, but do you need to apply for a new credit card each time you want to finance a Mac?

Quote:
Originally Posted by talmy View Post
Because you are (potentially) paying extra to buy something that will lose value. Makes no sense to pay money to lose it! On the other hand, borrowing to buy something that will potentially rise in value can be a good thing.
On the other hand, it is a highly risked move to borrow money to invest, say, in RRSP, or any other type of stock investment. Most financial planners will discourage people from doing so.

Quote:
Originally Posted by sostoobad View Post
If one can afford the payments, interest free financing makes total sense.
The cost of the money is FREE, why pay upfront for it,when you can pay over time...money is pretty much always worth less in the future.
On the other hand, with a short timeframe such as is for the financing of a Mac, depreciation of money would probably stay minimal.

Quote:
Originally Posted by DisplacedMic View Post
best thing to do is get a low interest low limit card from your bank or credit union and pay it off every month. save up for the computer or other big but manageable purchases and either pay cash or put it on the card and pay it back without carrying a balance the next month.

A great way to do this is to only put monthly expenses on the card - internet, power, phone etc and pay them off each month. expenses that don't change. everything else should be cash - including food and computers.

just my advice based on not following any of this when i was younger despite knowing then and now that is precisely what I should have done ;-p

FWIW i am 32, 2 kids, just at 6 figure total household income, house, 2 paid off used cars, 830 credit score.
Agree with you. Additionally, avoid credit cards that have rewards on them. They end up costing more for the consumer as well as the retailers, who in the end are raising prices to make up for the losses.

Low interest credit cards, on the other hand, are not strictly necessary as long as you're paying within the grace period (usually 21 days). But if you tend to overdue your account even by a slight margin on reasonable amounts, then the $40 annual it costs for the reduced interest rate will definitely be wisely spent.

I won't trust a Canadian cell phone company to act decently if given access to a credit card. On the other hand, I put many small expenses (including food from big chains that can absorb the cost to accept credit cards) on my card, and Internet access (independent ISP), and home insurance, and pay it off every two weeks. Last time I saw a balance on the "interest charged" line, it was about 3.08$. Ironically still, my income has been in the low 5 digits, but I managed to keep a top credit rating, currently at 780, mainly because an old shˇtty ISP charged me $700 of unpaid debt. I can't have them delete that from the record as these documents were lost in a hard drive crash Now you know why I am always recommending doing your backups not once, but twice, and pay for them as necessary.

Building credit is slow, but easy. Even without a credit card, subscribing to post-paid services and paying them on time will build your credit. Despite constant solicitation, I just have one credit card at a standard low-interest of 12.9%. My other bank has proposed that I get a Visa from them, but I politely refused, as I seen no clear advantage in having both a MasterCard and a Visa. I told them that I may be considering an Amex since one or two big chains here only accept it as a means of payment, and they didn't have any.

Quote:
Originally Posted by talmy View Post
Same here, but I've called them to have our credit limit reduced so if I really needed credit for a major purchase I could get it (and not at credit card rates!). Helping things out, our credit cards all have "auto pay" of the full balance so I never have to worry about missing the payment.
I did the same just before confirming my $30k line of credit, reducing my card limit from $18k. I just stayed wise with $9k on the card, but still can't figure out what I would ever buy for that amount on a card. Ironically enough, the day I called in to activate my renewal card, I was told that I have been approved for a credit limit increment. I kept my card at $9k mainly because I know that hitting more than two-thirds of the limit on a card is detrimental to one's rating, and that it was historically harder to get a limit increase than a decrease. Does this still holds true?

One thing I still don't know: I was told that a credit card account that has been opened a long while ago was worth more "positive weight" in the credit rating than a recently-obtained credit card. Is that true?
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