A financing question.

[deeddawg]

Can i ask, would I be in control of how much i can pay each month? I would like to pay perhaps half of it up front and then have it paid off before the end of the agreement.

Generally speaking, you can pay as much as you want each month provided you make at least the minimum payment.

Remember these words though: The Big Print Giveth, and the Fine Print Taketh Away. ALWAYS read and understand the fine print. Let the sales person wait while you take your time. If you don't understand it, find someone you trust to explain it to you. Your signature means you read and understood and commits you to everything in the fine print whether you really understood it or not. THAT is what gets people in trouble.

Financing something here or there, especially to build a credit history, is not a bad thing in and of itself when you have the money available. The trouble comes when financing becomes a way of life of getting the shiny toys when you don't have the money in hand.

People get in trouble when they assume everything will remain rosy and just like it is and live payment to payment without planning for disaster. Then the market crashes or they get laid off or they have a medical crisis and then they're screwed.

My point being -- go ahead and finance if you're able to get 0% and have the money in hand. You'll be building credit history and have an escape if something changes.

 

[GoCubsGo]

Yes you can pay whatever you want as long as you pay the minimum.

If you live in the U.S. you can get a copy of your 3 credit reports for free every year. When you do so there is an option to see your credit score for an extra $5. If your score is 720 or higher you will most likely be approved.

The actual legitimate site is here.

https://www.annualcreditreport.com/cra/index.jsp

As a few others have mentioned, there's nothing wrong with taking someones free money if you pay it back according to the terms. Doing 9 months assures you don't miss the deadline.

Cheers,

^this. I don't disagree that taking advantage of an interest free credit offer is a good idea for your first credit card. The issue with the card you're talking about is the APR after the 10 months. Even if you pay the item off in full, consider that 10 month free interest doesn't reset after you purchase something else. If you were to use the card again and not pay it off before the billing statement hits your mailbox then I believe the APR is quite high. You may regret owning the card. However, if you use it for that 10 months and then keep it only for a severe emergency then you should be ok. Let's face it though, 20 years old ... beer is a severe emergency. Just sayin'.


I would do it but know what you're in for should you either not pay it off in time or choose to use it again. If you have no way to pay this thing off then you're going to exceed the 10 month mark and pay much more for outdated tech.

 

[mrcrunchynut]

Do i gather from the replies that this financing would involve some form of credit card? I don't really want to sign up for a credit card.

 

[GoCubsGo]

Do i gather from the replies that this financing would involve some form of credit card? I don't really want to sign up for a credit card.

Yes and at this point since it doesn't seem to be clear whether you truly understand what you're applying for, I'm going to retract my statement and recommend that you read a bit more about financing, credit cards, the difference between a store card and a credit card that can be used anywhere, and the importance of maintaining good credit.

If you did not know that Apple's financing is done through Barclay's bank wherein you apply for credit and will be issued a physical card then I think it's safe to say you should wait that few weeks and pay cash for the computer. Just at least until you feel more comfortable with the process.

 

[bigchrisfgb]

What a lot of people seem to forget about credit cards, is that you can cut it up and put it in the bin after you have used it to make that purchase you wanted it for. So many people seem to think that if you have a credit card then it must be used.

I have said it in a post in the last page that for what you want, a personal loan from the bank would be more ideal, especially with you being young, and at your age and I'm guessing with no credit history at all, your bank is more likely to accept you for finiance then a credit company.

Also, even though you can get 0% credit on Apple's credit card, it doesn't mean you will, that rate will be reserved for the cleanest of clean, with a proven good credit history, someone your age couldn't possibly have that, so you would be offered an alternative rate.

Like others have said though, credit itself isn't bad for you, just make sure it gets paid on time. On top of this, yes you can make bigger payments each month, however for each time you do this there will be a penalty to pay, so it's best to save that extra up untill you have enough to pay it all at one time.

 

[deeddawg]

On top of this, yes you can make bigger payments each month, however for each time you do this there will be a penalty to pay

Say WHAT? Although prepayment penalties are not uncommon with mortgages, this is the first I've heard of them being applied to credit cards or consumer financing.

Could you cite the specific example(s) please? I'd like to learn more as to where these are being applied.

 

[a.jfred]

Someone else has said that because of my age and finances, they probably won't let me have one on financing.

FWIW, with my age (I'm older than you, let's just leave it at that) & finances (steadily employed for the last 8 years, making in the $35k-$45k range), owning my own home (for the last 4.5 years) & having a FICO over 700, I wasn't approved. I ended up going a different route, but only out of necessity (my old computer died a painful, horrible death).

I will agree with what someone else said: 0% offers CAN work to your benefit (I've purchased several items using 0% financing offers), but you do have to be very disciplined, and pay close attention to your bills & due dates. They want you to slip up & use the card for something else; and with all the changes in credit card laws, it's almost more confusing now than it was before.

 

[a.jfred]

Say WHAT? Although prepayment penalties are not uncommon with mortgages, this is the first I've heard of them being applied to credit cards or consumer financing.

Could you cite the specific example(s) please? I'd like to learn more as to where these are being applied.

I thought they'd changed the laws regarding prepayment penalties on credit cards ... *takes a look* Ah, well ... here's something the OP's going to have a problem with right off the bat. The new CARD act bans credit card issuers from issuing a credit card to ANYONE under the age of 21 WITHOUT an adult co-signer, or WITHOUT proof they can repay the debt. For reference: The CARD Act

Can't seem to find anything regarding prepayment penalties & credit cards, though. I know that can apply to a store line-of-credit, but that's not quite the same thing, and they do disclose in the fine print.

 

[dangerfish]

On top of this, yes you can make bigger payments each month, however for each time you do this there will be a penalty to pay, so it's best to save that extra up untill you have enough to pay it all at one time.

Well this is absolutely not true.

Look. Credit is not inherently bad. It can be if not used properly. Hell, oxygen can be harmful if not administered properly, but nobody on this forum is going to tell you not to use oxygen. Credit is a good thing to establish and doing so in your early 20's is a good idea. You need to have a good credit history if you want to buy a car or house with a decent interest rate. Get the card, pay it off on time and then tear it up. Build some solid credit history now so that later on, you can get a good credit card with a reasonable I interest rate.

 

[wct097]

What a bunch of crappy advice...

To which you added even crappier advice

There is nothing wrong with financing something if you can stick to a plan and pay it off in 9 months or less. Buying stuff on cash will not help you in a few years when you are looking to buy a car or house. The smart play if you can stick to it, would be to finance it and take advantage of the 0%. Make your regular monthly payments, and on the 8th or 9th month pay it off. During that 9 months, put the money in a CD or a savings account with a decent rate.

Sure there is. You're financing a depreciating asset that you could not otherwise afford. If you start that lifestyle in college, it's very tough to break. One of the biggest, if not the biggest, problems in this country is the fact that people live above their means, opting for instant gratification in exchange for being saddled with debt their entire lives.

The absolute worst advice you could ever give a college student is "here's a credit card, go buy all the toys you want now, and pay later".

By doing this you'll do a couple things. You'll make a few bucks on that money you put away for 9 months that you wouldn't have otherwise. You will also raise your credit score by making regular on time monthly payments and then paying it off.

This is simply not true. Your credit score is not affected by you having actually used your credit. Your credit score is a snapshot of a point in time. Having an credit card for 10 months with no balance and a limit of $3k that you've never used is no different than having an Apple credit card that you charged $3k on and subsequently paid off over 10 months.

Of course this all hinges on using some discipline and sticking to the plan. If you can't manage your money and make the payments on time and pay it off in 9 months or less, then nothing I said above matters.

And college students everywhere have statistically shown that level of discipline, right?

 

[wct097]

Look. Credit is not inherently bad. It can be if not used properly. Hell, oxygen can be harmful if not administered properly, but nobody on this forum is going to tell you not to use oxygen. Credit is a good thing to establish and doing so in your early 20's is a good idea. You need to have a good credit history if you want to buy a car or house with a decent interest rate. Get the card, pay it off on time and then tear it up. Build some solid credit history now so that later on, you can get a good credit card with a reasonable I interest rate.

Agreed. Credit is merely a tool.... a tool that can get you in over your head very easily. Advising a college kid to buy expensive toys on credit is horrible advice.

If you want to build credit, the absolute best way to do it is to get a credit card with a limit of about 1.5x what you spend on your debit card in an average month. Simply use your credit card in place of your debit card, and pay it in full at the end of the month. You get the benefit of building history of having a credit card that's reported as 'paid as agreed', that particular company will see your usage and increase your credit line as they deem appropriate, and you'll likely be able to get some sort of benefit from using the card (cash back, points, miles, etc).

 

[dangerfish]

Your credit score is not affected by you having actually used your credit. Your credit score is a snapshot of a point in time. Having an credit card for 10 months with no balance and a limit of $3k that you've never used is no different than having an Apple credit card that you charged $3k on and subsequently paid off over 10 months

Credit is merely a tool.... a tool that can get you in over your head very easily. Advising a college kid to buy expensive toys on credit is horrible advice.

Your credit score IS affected by obtaining credit and making timely payments. That's exactly what your credit report is... A record of you payment history. It is very presumptuous to assume he is going to go crazy buying high dollar items that he can't afford. He has a plan for how he is going to pay for the computer. This is a perfect opportunity for him to build some credit history and have some flexibility in paying for the item. He just needs to understand all the caveats. Those have been explained.

 

[Mac Composer]

I have considered this. I am 20 and at university. If i wait a few weeks longer then i could buy it outright,

If you can buy it outright in a few weeks you'd be a fool to finance it.

Being a student and strapped for cash means nothing, the older you get, the more obligations and expenses you've have. Get used to being strapped for cash, it's the American way.

 

[wct097]

Your credit score IS affected by obtaining credit and making timely payments.

There is absolutely no benefit to actually using the credit card, in respect to credit score. Your credit score is a snapshot of a point in time. The only history that makes a difference is the fact that the credit card has been reported as 'paid as agreed', which happens even if you have a zero balance and had nothing to pay.

If you have a credit card for 12 months and never charge a penny on it, your credit score would be exactly the same as had you charged up to the limit and paid it down to zero in 12 months.

That's exactly what your credit report is... A record of you payment history.

Payment history, not balance history. Your credit report today (and thus score) does not show what your balance was, or how much you paid on your credit card in September.

Credit cards affect your credit score in three ways.
1. Payment history.... not how much you paid, or how much you owed, but simply being open and not being past due.
2. Balance-to-limit ratio.... your score will be negatively affected if you owe more than 50% of your CC balance. People with few cards and low lines of credit can see their score vary wildly month to month based purely off of the balance reported, regardless of if the card is paid in full each and every month.
3. Length of credit history. If you don't have a CC, having one will generally help build a history, even if you never charge a penny on it.

It is very presumptuous to assume he is going to go crazy buying high dollar items that he can't afford. He has a plan for how he is going to pay for the computer. This is a perfect opportunity for him to build some credit history and have some flexibility in paying for the item. He just needs to understand all the caveats. Those have been explained.

I never assumed anyone in particular was buying a high dollar item they couldn't afford. I was speaking in general, reference to using credit as a tool and advice given to charge up a card in order to build credit history.

 

[bigchrisfgb]

Well this is absolutely not true.

Look. Credit is not inherently bad. It can be if not used properly. Hell, oxygen can be harmful if not administered properly, but nobody on this forum is going to tell you not to use oxygen. Credit is a good thing to establish and doing so in your early 20's is a good idea. You need to have a good credit history if you want to buy a car or house with a decent interest rate. Get the card, pay it off on time and then tear it up. Build some solid credit history now so that later on, you can get a good credit card with a reasonable I interest rate.

If you even botherd to read the rest of my post then you would relise that I have said pretty much the same thing. Credit is not a bad thing if it's not paid on time.

Credit card companies will not let you pay more then what your monthly set bills are without any penalties, simply because if they allowed that then they would lose out on the interest. Yes you can ring them up and ask to pay it all off at once, however there will be a fee for this. This combined with the money you owe is called a "settlement figure". Paying more each month will be allowed but it will incur a cost for doing so each month.


So lets put it in simple terms. You pay for something on your credit card, that is then dived into how many month there is left on your credit card, plus interest. This then becomes your monthly fee, if you pay over that in one payment then you pay a fee for doing so because it reduces how much you owe in future months and therefor reduces the amount of interest you pay.

 

[deeddawg]

Credit card companies will not let you pay more then what your monthly set bills are without any penalties, simply because if they allowed that then they would lose out on the interest. Yes you can ring them up and ask to pay it all off at once, however there will be a fee for this. This combined with the money you owe is called a "settlement figure". Paying more each month will be allowed but it will incur a cost for doing so each month.

If this is true for you, then you need to find a better credit card company.

I've never experienced this with AmEx, Visa, Mastercard, or Discover in twenty-odd years of using credit cards.

 

[bigchrisfgb]

Say WHAT? Although prepayment penalties are not uncommon with mortgages, this is the first I've heard of them being applied to credit cards or consumer financing.

Could you cite the specific example(s) please? I'd like to learn more as to where these are being applied.

I don't know where you are but I'm in the UK, so if your not from the UK then it might be a different case, but pretty much any credit works this way over here. CC and personal loans are no exception, though for motor finance it is a different case with a lot of financers having different ways to work things out.

Infact as I recently worked as a car salesman I can tell you that in the event of not being able to pay off the credit having a motor finance loan is better than having a personal loan. Simply because handing over the car to the motor finance company is seen payment of finance. If you gained a personal loan to buy the car then the finance company would just send in the bailaiffs and claim as much as they possible can, including the car, and this would lead to you having a negative credit rating.

Atleast that is how it works here in the UK.

 

[bigchrisfgb]

If this is true for you, then you need to find a better credit card company.

I've never experienced this with AmEx, Visa, Mastercard, or Discover in twenty-odd years of using credit cards.

I don't have a credit card, and I don't see myself ever having one, I'd rather have a personal loan. This is the case in the UK.

Even the Apple store representatives will tell you this.

 

[deeddawg]

Atleast that is how it works here in the UK.

Therein likely lies the difference. My experience is in the US, not UK.

Here, typically the only place you find prepayment penalities is in some home mortgage loans. Not in credit cards. The card issuers make money through the merchant fees the merchant pays on each transaction, as well as in interest on outstanding balances. While they prefer that consumers carry a balance, the typical practice is that there are no additional fees beyond the credit balance if paid in full each month.

Edit: For what its worth, often the best deal on auto finance here is through your existing bank or credit union, NOT through the car dealer. Terms can vary of course, but I've not experience prepayment penalties there either.

 

[DaftZombie]

The MBP I'm typing this on was purchased using the Barclay card. As far as being accepted it's VERY easy. I don't have a great credit score and I listed my annual income as 10 grand and boom, instant approval. Once approved you can visit the apple store during the same browsing session and make a purchase without the card actually being in hand. Also I got the laptop Nov. 1st and first payment was due early December.

Now why was I accepted? I've heard that Barclay (and other banks) like to pickup young people (students ect) who are probably not good with handling finances and don't really have a steady income. That'd be me.

If you are approved it is totally possible to make it out alive without any extra charges, but also easy to build up quite a bit. Read ALL the terms and fine print, make sure you pay payments ASAP each month, and get the thing payed off as quickly as you're able too, opposed to within the 10 months (mine is 12 months btw...?).

If you can handle the financial responsibility, do it! If you have any second guesses, don't!

 

[mrcrunchynut]

The MBP I'm typing this on was purchased using the Barclay card. As far as being accepted it's VERY easy. I don't have a great credit score and I listed my annual income as 10 grand and boom, instant approval. Once approved you can visit the apple store during the same browsing session and make a purchase without the card actually being in hand. Also I got the laptop Nov. 1st and first payment was due early December.

Now why was I accepted? I've heard that Barclay (and other banks) like to pickup young people (students ect) who are probably not good with handling finances and don't really have a steady income. That'd be me.

If you are approved it is totally possible to make it out alive without any extra charges, but also easy to build up quite a bit. Read ALL the terms and fine print, make sure you pay payments ASAP each month, and get the thing payed off as quickly as you're able too, opposed to within the 10 months (mine is 12 months btw...?).

If you can handle the financial responsibility, do it! If you have any second guesses, don't!

But i cant list my income as £10,000. (Although i get full student loan so it's not actually far off) It seems that it will be quite inconvenient to get the financing. If I just go into the apple store and say 'Hey! Apple Man, gimme this pro, and i want it on finance!' What would the likely procedure be? I am considering now just waiting a month or so until the announcement of the new pro's and see if it would be worth waiting.

 

[DaftZombie]

But i cant list my income as £10,000. (Although i get full student loan so it's not actually far off) It seems that it will be quite inconvenient to get the financing. If I just go into the apple store and say 'Hey! Apple Man, gimme this pro, and i want it on finance!' What would the likely procedure be? I am considering now just waiting a month or so until the announcement of the new pro's and see if it would be worth waiting.

That sounds like a good plan to me. It's possible to do the finance thing without paying out the a$$ in charges, but it's waaaay easier to just pay cash. Wait until the update and save up all the while.

 

[Mr. Chewbacca]

The MBP I'm typing this on was purchased using the Barclay card. As far as being accepted it's VERY easy. I don't have a great credit score and I listed my annual income as 10 grand and boom, instant approval. Once approved you can visit the apple store during the same browsing session and make a purchase without the card actually being in hand. Also I got the laptop Nov. 1st and first payment was due early December.

May I be rude enough to ask you how much you were approved for? Or do you apply for an actual purchace price?

I hope you dont mind me asking

 

[snberk103]

I don't know where you are but I'm in the UK, so if your not from the UK then it might be a different case, but pretty much any credit works this way over here. CC and personal loans are no exception, though for motor finance it is a different case with a lot of financers having different ways to work things out.
...
Atleast that is how it works here in the UK.

OK, that is just whacked. I'm speaking from a Canadian perspective, and there are no penalties for pre-payment of CCs here, far as I know. You can even get a line of credit attached to credit card. Basically, it's a bank loan (at bank loan rates, and with the regular requirements for collateral etc) except that you can borrow against it and pay it back as you need and can, though there is a monthly minimum payment if you do borrow agains the LoC.

I have one card that I use for the vast majority of my purchases - 'cause it's got AirMiles. I pay it off each month, even if I have to dig a little bit into the penny jar. I haven't paid any interest on it for over a year. When I do pay interest it's because I'm late with a payment due to forgetfulness. Then they charge me for that month, and the following month as well. B*ggers.

I have a separate card I use for my business. I recently made a big pre-payment on it so I could buy a camera that was over my limit. Unfortunately I got a better deal than I had anticipated and now I have a credit balance (Ok, it's not bad that I saved money, but the CC company doesn't pay interest when I'm lending them money, and I haven't needed anything for the business lately).