Is Paying Over Time a Smart Move?

Wrap-up

What does paying over time actually cost you?

Financing a purchase over time is not always as cheap as it seems. Sometimes you actually wind up paying much more for an item than if you bought it with one up-front payment. A few simple calculations can help you determine how to tell a good deal from a rip-off.

In this lesson you:

• Explored the concept of "paying over time"
• Decided if it is better to finance a purchase over time or pay for it up front
• Calculated the cost of paying for an item over time

On your own: 

• Look for newspaper ads that offer to let you purchase items up front or pay for them over time. Evaluate the ads and calculate which option is the better deal.
• Whenever you plan to buy a costly appliance or machine, do your homework first.  If the deferred payment plan is way more expensive than the up front price, figure out how long it would take you to save the money for an outright purchase.
• When you're shopping, practice calculations so you can evaluate offers on the spot. You can estimate the costs in your head, use the calculator on your phone, or ask a salesperson to lend you a calculator.