Profitable Credit Installments or Even Harmful?
The more easily people buy goods in installments on credit makes many of them actually in debt. Now every time you stop by an electronics store, not a few companies or financial institutions make attractive offers instead of price discounts.
That applies if you buy these items by way of installments or credit it through financial institutions such as the prevalent in Indonesia. You will be offered cashback promos, discounts and more if you take a certain credit period. Even though it’s the same as making your financial health critical.
Not to mention, the conveniences offered make customers increasingly want to take that road. In fact, about 10 years ago, applying for credit was a tiring process and often involved many documents.
Now, technology platforms allow people to submit their applications in a few moments and receive responses in just seconds. In today’s fintech world, financial options such as credit cards and shops are starting to look old-fashioned. And this kind of quick application credit is used at store counters to help motivate sales.
This business also started from college to the world of medicine. Chief executive at payment technology provider, said many different sectors work to offer credit to their prospective customers.
“Consumer credit does not have to be limited to retail. We support traders in a number of different sectors to help their customers access the things they need or want. “
These sectors include training, health care, and travel. Payment tenor ranges from one to three years and, generally, short-term credit will not work for this type of purchase.
“Looking into health care, pet owners often face large bills for their pet’s surgery and care. In this case, the offer of a payment plan later can really be of help.
Such credit options often work. Research shows that 65 percent of customers who have used retail financial platforms say they only make purchases because finance is already available.
Moira O’Neill, head of personal finance at Interactive Investor, said she was worried about the high level of debt being the lifestyle of today’s society.
“The scheme of buying now, paying later is basically unsecured debt and people must be careful in using it,” he said.
As a millennial generation, don’t live with an increasing amount of debt every year. Make careful and well-planned planning. If you need goods, wait until the money is collected.
“Some of those who use it responsibly will find it a useful tool. But some users may find it leads to bad habits. “
In the past many people felt ashamed if they had debt. They feel reluctant to buy goods even though the installment option is offered. “In the past, there were psychological barriers that involved shame people in debt. But for the younger generation, I’m afraid this might change, “he explained.
Help the buyer
But not everyone agrees that buying goods on credit paralyzes finance. Many argue that this form of fast and cheap credit is very helpful for buyers to get the goods.
The founder of Laybuy, an online credit provider that automatically provides payment services every week for the next six weeks. He said that millennials are now starting to fear using credit cards. And this installment or short-term credit instead provides a one-time loan option.
“This new, more transparent relationship actually gives buyers confidence and greater control over expenditure limits. A new payment will make them wiser in managing finances, “he said.
Advantages and disadvantages
There are several advantages and disadvantages that you must know before taking this step to get the goods. First, the ease of repaying goods that are applied makes you not have to worry about the price being too high with the existing budget.
In addition, the increasingly fast and easy process is also the reason many people take this practical step. Requirements that are needed are also usually very simple. The interest provided is affordable and in accordance with your financial condition. They even applied installment deadlines which were quite long with light installments. If you want to pay it off quickly, you can. You take installments 12 times or a year with a very large nominal.
However, credit installments like that also have disadvantages. If you are late paying the installments, the fine is waiting for you up front. If so, you will be faced with the confiscation of goods. Or usually there will be a debt collector who terrorizes to immediately pay the bills.