How to recognize hidden credit in installments

Bitter experience

Recently I decided to buy a refrigerator in installments. I came to a large home appliance store and chose the model I liked at a price of 39 490 rubles. The seller referred me to the credit department. There they explained to me that the store does not give installments directly, this is done by partner banks. After I provided my personal data, the manager sent requests to a number of banks. Approval came from three out of six. I chose the bank with the most acceptable conditions.

The payment schedule attached to the agreement indicated the interest payments and the total after interest. The contract also had a column with insurance payments (without this, the bank did not want to approve the installment plan). The total amount is 43,127.24 rubles. Together with insurance, the overpayment amounted to 3,120.52 rubles. Of course, you can refuse insurance, but in this case, the bank may not approve the installment plan.

Each time you make payments through an ATM of this bank, a commission of 100 rubles is charged. You can also pay money through the online account of another bank, where the commission is usually lower, or free of charge by mail 10 days before the monthly payment deadline. If you deposit funds through an ATM with a commission, then the overpayment can amount to another 1,200 rubles per year, that is, only 4,320.52 rubles.

The total amount of payments by installments in terms of interest was approximately 10% per annum.

Even if this is not 20% on a regular consumer loan, it is still not an installment plan. In order not to fall for such tricks and not overpay, it is important to clearly understand the difference between an installment plan and a loan.

Installment and credit: what's the difference

Installment is a method of purchasing a product or service, in which the buyer pays for the purchase within a certain period, not in full, but in installments. By law, this is a type of loan, but in reality the difference is fundamental for the buyer.

A bank loan is a method of purchasing a product or service, in which the buyer pays for the purchase within a certain time in installments with payment of interest for the use of funds.

Many large stores offer customers goods both on credit and in installments. Of course, the installment plan is the most profitable option for the buyer, but it is more acceptable for the seller to offer a loan, because then the money is given by the bank, which takes all the risks. In both cases, the product or service is provided to the client immediately after the transaction is completed.

Among the types of installments, one can distinguish the classic, or simple, in which the cost of the purchased goods is divided into parts and must be paid by the buyer within the agreed period, and the installment-loan from the bank: the store makes a discount to the bank in the amount of interest under the loan agreement.

So that instead of an installment plan you are not imposed a loan on unfavorable terms, you need to carefully read the contract, and only then sign it. Let's see what you need to pay attention to.

Installment agreement

An installment agreement is concluded between the seller and the buyer. In some cases, to receive an installment plan, it is enough to present a passport, in others, certificates from the place of work or from a bank may be required. The seller has the right to determine the terms of the contract independently. However, the buyer must track all the nuances.

Pay attention to the following points:

terms and availability of interest for the funds provided;
voluntariness of insurance services;
sanctions for non-payment of debt;
conditions for the return of defective goods.

Until the buyer pays the full amount, he is the user, not the owner of the product. If the debt is not repaid by the specified date, the seller can withdraw the goods. However, this is theoretical. In practice, he is unlikely to want to take back, for example, worn boots or a stove that is pretty dirty during cooking.

The installment agreement can be a loan agreement between the buyer and the bank, which indicates the amount of payment with interest. At the same time, the store makes a discount on the goods in the amount of interest on the loan. The total amount of payments for the buyer should be equal to the value of the goods on the price tag.

Output

Stores often issue loans for installments (albeit not with such a high interest rate as with conventional lending). You can use such an installment plan, and it is generally more profitable, but at the same time it is necessary:

make sure that the final amount does not greatly exceed the price of the goods;
check for the absence of additional services that you do not need;
make payments in advance by mail (it's free) or transfer through a mobile bank with a lower commission.