Buy now and pay later deals, also known as deferred payment financing, can be used to your advantage, as long as you understand the details and read the fine print.
After moving into our new home, my husband and I decided to buy new bedroom furniture. We went to Leon’s furniture store, where we bought a king-size bed and mattress set, chest of drawers, night stand, and dresser with mirror. It’s the first time we've bought a bedroom set we didn’t have to assemble ourselves.
The total came to about $3,800 and our options were paying immediately or later, with no interest charges. We considered paying cash or using a credit card, but we are concerned about unexpected expenses that often come along with a new house.
That’s why we opted to pay later. The “Don’t Pay for 18 months” offer gives us until November, 2013 to pay for the furniture, without interest. There was a $100 administration fee, and we had to pay the HST right away (about $500.)
There was also an option to defer the payment for six months, which has no administration fee.About a week after our purchase, we received a Leon’s Visa Desjardins card in the mail.
Here’s how it works:
The Visa card has a pre-approved financing limit at Leon’s, has no annual fee and includes three days of travel insurance. We have a $1,500 limit for regular purchases, and a $6,000 limit at the Leon’s.
The interest rate: We can pay the balance down the $3,800 Leon's balance on any schedule we choose before 18 months, without interest. If we don’t pay the balance in full before that time, we will pay interest at 19.4 per cent as of November, 2013. Some financing plans charge interest from the day of purchase. The interest rate on regular purchases is 14.9 per cent.
The payments: There are no minimum payments on the purchase from Leon’s. We can pay through Leon’s, telephone or online banking, or at a bank. Desjardins doesn’t send monthly statements, but they will send a reminder about three months before the balance is due. If we use the card for other purchases, the minimum monthly payment is 5 per cent of my balance or $10.
We were glad that we choose this option when our dryer suddenly stopped working a few days after we bought the furniture.
To make this plan work for us, we need to make sure that we don’t put any more purchases on the Visa card and pay the balance in full prior to November, 2013.