January 17, 2022
Q. If a company offers 0% financing, should I take that deal?
A. It depends. Just because something is zero % interest, doesn’t mean it is worth it.
When I see a deal like this, I often ask if I can purchase something cheaper if I pay up front versus financing the item; sometimes the answer is yes, and I walk away feeling like I got a better deal.
If the answer is no, then I take the cash I would have spent on that item and I invest it either in my emergency fund or my brokerage account and try to make the payment out of cash flow. That way if I ever need to pay it off quicker, I have the cash to do it.
Make sure you look at the fine print on this, if you accidentally miss a payment or go one day beyond the payment period, they may assess the interest all the way back to the original loan amount, not just what’s left.
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