Affirm: 0% Interest for 36 monthly payments. Why wouldn't you do this? (US/CAN)

Submitted by nabeel_co t3_11dynwq in personalfinance

Like, the money for the purchase is there, and would otherwise be sitting in an account making interest.

Why WOULDN'T I do Affirm? It's literally free money in interest and inflation if I already have the cash and can invest it or pop it into a savings account for the next 36 months.

Is there some "got-ya" in their terms? Are they going to sell my rectal scan to some data mining company or something?

Are they gonna screw me by "accident" and then hit me with an arbitration clause so it's not worth my time or cost me more than I'd get back to sue them or take them to arbitration?

What's their game here?

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hems86 t1_jabks6j wrote

It’s a basic financing business model. They are betting that most people will not be responsible with a 36 month 0% interest loan and not pay off the debt by then end of the 36 months. Once that happens, the interest will shoot up to the 20% to 30% range.

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honey-smile t1_jabjvzj wrote

They’re legit. They make money in a myriad of different ways but they’re not screwing people over (at least not from what I’ve heard and personal experience).

It’s just a different way to pay for something. In contrast, you could often get 1-3% back if you bought it with a credit card (and assuming you had the cash to pay it off without accruing interest) so it isn’t always a better deal.

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nabeel_co OP t1_jabk9we wrote

3% cash back?! I'm using the wrong credit cards... 😳

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Pretty_Swordfish t1_jacfsrp wrote

Cap1 Savor one is 3% for groceries, dining, Streaming. Amex is 6% for groceries with $95 annual fee. Amazon prime card is 5% for Amazon and whole foods, etc. Look at the credit card reddit for tons of info.

As for Affirm, plan to pay off the bill at least 30 days before the due date in full and have payments on auto and it's fine. Most people aren't that responsible and they miss a payment or can't pay in full by the end of the 0% period.

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xEvilMunkyx t1_jacpsci wrote

Just adding that $95 AF Amex card (the BCP) also comes with 6% Streaming and 3% Gas & Transit.

(Figured since you mentioned streaming on the Cap1, it was worth including for the Amex.)

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honey-smile t1_jabkni8 wrote

Discover has 5% cash back categories that change every quarter. One is Amazon, online shopping, restaurants, etc.

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AccomplishedClub6 t1_jaclhmb wrote

Citi custom cash is way better. 5% cash back on categories that don’t change and it auto finds the highest spending category each month. I use it as my dedicated grocery store credit card.

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Many-Sherbert t1_jabkwb4 wrote

They get you if you don’t pay for it by the end of the term. They hit you with all the back interest I believe. I use it all the time for larger purchases even though I have the money in the bank 10 fold. I don’t have to worry about having $700 gone out of one pay check I can just pay $120 for 6 months or $250 for 3 or whatever. ( I just threw random numbers out there)

Set up the auto payment and make sure it’s paid off before the end of the term and you’re good.

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neekogo t1_jabkj0v wrote

Hmm, maybe ill use the money to build a 3yr CD ladder. CD rates are about 5%

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antwan_benjamin t1_jabwwtl wrote

Every time I go to buy something and I see an offer from Affirm at 0% interest I always take it.

Their "game" is obviously they're hoping a payment bounces and they can charge me a bunch of interest. But in my personal experience, I've noticed usually the 0% payment option pushes me over the edge to make the purchase. Just recently I needed a new belt and went belt shopping. I found one I liked. While browsing the website I also saw a new wallet I liked. I want a new wallet, but I could wait a couple of months before buying one. But when I saw I could make payments over a few months at 0% I just went ahead and bought the wallet too. So they got me to spend twice as much as I would have otherwise.

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nabeel_co OP t1_jabyad7 wrote

Yeah, that's the danger. For me, I've been looking at a new phone. I've been rocking very old used phones since about 2016 because paying more than 1000 bucks for a phone is CRAZY to me. Shit, paying more than 400 bucks seems to high to me.

But there are some new phones on the market that have some features that really would make working on the device easier, and even the older models of these newer phones are over 1000 dollars for a good one, then add the storage I need, and I'm in the new phone territory anyway ...

I don't want to spend that kind of money on a new phone. It's a freaking phone! They literally cost like 300 bucks to make. But this is how the industry prices, and it is a tool that I need and can afford to buy... ...it just stings a lot knowing what the profit margins are like...

Deferring payment, and being able to collect some interest by leaving near 3000 dollars in investments, instead of paying that all at once, and taking advantage of inflation devaluing the price of the device over almost 3 years effectively makes the price cheaper...

But this normalizes paying three thousand fucking dollars for a device that cost 1/10th that to make, which I don't want to do.

I wish the second hand market was more reasonable... I wish the primary market was more reasonable... but I don't really have a choice, because I use my phone literally as a computer instead of using a laptop when I'm out and about.

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redditenjoyer737 t1_jadejgs wrote

I got a new Pixel 7 for free several months ago by trading in my old phone (Motorola G4 or something or other that I bought for $150 and had a street value of $5. The deal was literally, trade in any phone and get the Pixel 7.

So look at what your provider is offering in terms of deals and if you aren't super picky about having the latest and greatest features, you can get a very functional, useful phone for cheap to nothing.

I'm like you - I'd never pay $1,000 for a freaking phone.

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nabeel_co OP t1_jae6qu5 wrote

Yep, but we don't have much choice anymore.

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KReddit934 t1_jachen1 wrote

Yep...that is,why they really do this...tricking you into spending more.

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redditenjoyer737 t1_jade7eh wrote

This is where the "But its free money" argument breaks down. Spending $3k on bullshit at 0% isn't 1worth it if you would have otherwise spent $1,200 on necessities and paid cash.

People overspend when they use credit - plain and simple.

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nabeel_co OP t1_jae1kut wrote

Well, my hands are tied, because it's not like the devices are getting any cheaper... and the used market is also maintaining super high prices. So what do I do? I either pay cash, or leverage credit and at least get to keep my money making me income for a little while longer.

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redditenjoyer737 t1_jae4i2j wrote

>leverage credit and at least get to keep my money making me income

Honestly - how much after-tax income are you making financing a $1,000 phone?

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nabeel_co OP t1_jae6ock wrote

$3000... they are fucking $3000 now.

I have damn near 1TB of storage in my used phone that I picked up for 400 bucks, because you could add SD cards back in 2019... but now... you can't... I need the storage, and I need the larger screen because I literally use my phone as a laptop/computer.

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Knipfty t1_jac9k8e wrote

You didn't say what you are buying. Or where you are buying it. So I'll make a generalization.

Whenever I see "same as cash" deals, I ask what is the cash price? How much is the store willing to discount the item if I pay using cash? I usually get 10% off. One time, for some furniture, I got 33% off.

Nothing in this world is free. You just sometimes need to dig a little deeper to find out.

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nabeel_co OP t1_jae1uia wrote

It's a phone. They aren't going to negotiate price unless I buy in bulk, but I only need one.

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