Question 2

Question 2: I am about to move out of home and need to purchase some furniture for an apartment I have rented with a friend. I am constantly seeing deals on the TV advertising 'nothing to pay' for anywhere between 12 and 48 months. Can you provide some informaiton on these types of deals, their pros and cons and the level of interest I would be expected to pay if I did not pay off the amount owing in the designated time period?

A. These deals are classified as incentive schemes which encourage consumers to purchase their products because of "nothing to pay" deal. It is important to read the fine print on advertisments when it states "nothing to pay" as there may be a minimum purchase price. It is common under these terms for the 'interest' that would normally apply to this type of purchase to be built into the price. For example, most companies will provide a significant discount if you offer to pay for goods in cash. Although, these discounts are not available to those purhasing via the 12-48 months no deposit, interest free conditions. These incentive schemes are good if you do not have enough money to pay the full amount however, since there is interest charged after the 12-48 month period, you could be paying more than you would have expected.