In-store finance

Information about vendor-organised, purchase-specific loans

In-store finance involves obtaining credit from a business or its exclusively linked credit provider so you can buy goods or services from that business.

Watch Out!

You may find that you are tempted to purchase an item simply because the finance is easily arranged at the store.
You are often issued with a credit card as part of an interest free deal. The credit card may be used to purchase other goods or services or to obtain cash up to the maximum credit limit on the card.
Beware that any transaction made on the card will attract interest at a very high rate, much higher than your average credit card or personal loan interest rate. You may find yourself in hot water if you over-use the credit card, as payments made towards the interest free purchase will actually be used to pay out any transactions made on the credit card before the interest free purchase.

Before you sign up

Make sure you know the total cost, terms and conditions for the finance.
Do not just concentrate on the monthly repayment figure; work out the total cost of the credit and determine how much you will have to pay back in total.
Shop around to compare the price of the good you are buying and other finance that may be available.
If you purchase goods from a business with credit from their linked credit provider, it may be the case that the goods are security for the credit. If this is so, they may need to be insured. Do not automatically accept the insurance policy offered by the credit provider. Give it some thought and shop around for the best deal. Only purchase the insurance that you need.
Personal loans and other credit products often charge lower interest rates.

Benefits

The convenience of in-store finance is what makes it so appealing. You can enter the shop with only proof of income and residence in order to obtain finance.
Often, retailers will offer extensive interest-free periods to entice customers to buy. If you use this bonus effectively, and pay off all that you owe before the interest-free period expires, you won't have to pay a cent in interest. However, if you have not paid back all that is owing by the time the interest-free period is up, you will probably be hit with a substantial interest bill since thereafter interest is compounded (ie. all of the interest that you would have paid over that period if you weren't in an interest free arrangement is now added to the principal amount and interest is calculated on that interest retrospectively).