June 14, 2008

To Flexirent or Not!

To FlexiRent or Not to FlexiRent & Buy Now Pay Later Exposed!

I am in the market for a new laptop and saw many End-of-Year Sales!! So I walked into a major retailer to have a look. Now I am not going to name the retailer - but the eager sales person walked up to me - as they do - and I asked him a question.
He showed me a couple of laptops that suited my needs - and then it started…
Sales Person (SP): “You know we are having a great promotion for this item - if you Flexirent it - you will get this item and that item for FREE!”

Now, like everyone, I am a sucker for the word FREE! So I was very very interested! But the sales guy kept going - without knowing that he had me at Free!

SP: “You know if you do Flexirent - all your payments are tax deductible and they give you insurance against theft / accidents, etc. etc.”

Now, I was getting a bit worried about this wonder-drug - and asked him how much it was going to cost me - for a $1,800 laptop - over 12 months it would cost me a total of $2,400!

Oh! Now I understand!

So, I came home (without buying it) and Googled Flexirent - and out came the complaints and issues, etc.

Now I understand why many of my clients caught in this Flexirent challenge end up paying at least $600 or more to get the laptop / LCD / Plasma TV that they want.

And the funny thing is - even after paying this amount - the item is still not yours to own! You need to pay 1 month’s installment - EXTRA - to take ownership of it. That’s an extra $800!!!

The learning I got from this is:

Option 1: I have got the cash to purchase!

Then DON’T go to the big retail chains - You can use them to research it - as in touch and feel the laptop / tv / anything else. And then go to the following online places to buy them at a deep discount.
For example, when I checked the same laptop I was looking at on eBay - it went for $1399!!
Now that’s a saving of $400 just on the cash price! But if you went the Flexirent way (which I hope you don’t) then it is a saving of - wait for it - $1,200!! Now that’s another laptop or Trip to New Zealand or to Fiji - Flight / accommodation / Food / Shopping !!!

Option 2: I don’t have the cash to purchase!

If you don’t have the cash - ask this important question:

Do I NEED this right NOW? Or do I just WANT it right Now?

You can see where this is going - right?

If you don’t have the cash - basically don’t buy it!

But if you have to buy it - Only buy it because it’s an absolute necessity - for example, the fridge has died on you or the laptop is breaking down and you need it for work or something more important than - I just want it / It’s a good deal! / I like that model / etc. etc.

So what can you do in these scenarios - well –
a)

Look at the Buy Now, Pay Later Options

The warning here is - if you don’t pay on time - the Penalty rate charged is around 23%++ and I am not sure if it’s charged from the time you have had it or from the time you did not make the payment.
Oh! another thing to keep in mind - with this option you will also get a credit card as well - again the guys who are giving you the money - want you to buy more and more and more!! Watch Out!

Get a Personal Loan

At around 12 - 15% and pay-it off over 3 years / less. Why 3 years? Well, the technology is moving so fast - if you keep the loan any longer you will be stuck with older technology and still have to pay for the item.

I hope I have rattled some cages with this Post - well I know my clients are financially educated enough not to get caught in these kinds of - for want of a better word - scams. But I just want to bring this to the public on what “interesting” ways are out there by which they can be sucked into more and more financial pressure.

Happy shopping!

Ananda

RBA Increases Interest Rates - to 7.25% - What Does it mean to you?

As you all know the rates have been pushed up by the Reserve Bank today – to 7.25%.

What it basically means is that the average rate charged by the Major Banks (Such as Commonwealth) which was around 8.27% will go upto around 8.52% - or more!. (This rate is for loans above $250,000 and have an annual fee).

With the current rates as they are, many of the first home buyers are going to find that they will not be able to afford the houses they want to purchase. Which is unfortunate and takes us Australians away from the Aussie dream of owning our own home. But the Government seems to be doing something about it – but I am not sure how well its going to help the battling first home buyers.

Another bunch of people who are going to be majorly affected by this are the folks who went and bought properties that are well above their capacity and are now struggling under the inflated monthly repayments. To top it off the “Buy Now – Pay in 48 months” society – which lives on Credit Cards, Personal Loans, Car loans – are also going to get affected –because the interest rates for these are going up as well.

Now there are couple of things that you can do:

1. Look at what your bank / financial institution’s interest rate & fees are – and compare it to the “standard” rates (like the one I gave you above) and see if you are better off or worse off – If you are better off – tell everybody – so that your friends and families can get a better rate too.

2. If you are worse off – first off talk to your bank / financial institution – to see if they can do any better than what they are currently charging you. If not, then get in touch with a reputable Mortgage Planner – to help you clearly understand your own financial situation and then to help you find a better solution.

3. Do the same thing for your personal loans, car loans, credit cards, etc. – See what your current interest rates are and either look around for a better deal or again contact a Mortgage Planner to find a better deal for you – it might mean that you will need to put all the loans into one with a lower interest rate or move them into cheaper options, like a cheaper credit cards, cheaper loans, etc.

With a tight cashflow that you may already experiencing, the current rate increase will make an impact on it even further. In these cases, every single saving will make a huge difference. So please do review your financial situation in a bit more detail and sort things out. If you have any questions or want any guidance, please email me or call me so that we can have a quick chat to see how we can help you.

Have a great Week!

PS: I work mostly via referrals – so please don’t keep my services a secret!


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To Flexirent or Not!