Two years same as cash?

I prefer to pay things off when I buy them if I can too rather than make payments. It may seem more rational to stretch it out but with interest rates being so low, it really does give you much of an advantange so why not do it the way that is most comfortable for you?

If you had some other loan with interest you could put the money towards that and pay off the 0.0% loan over two years.

Theoretically it is better to take the 0.0% loan. But…. Let’s do the math to see how much that deal really saves…
Assume you bought something for 2 years, $1000, same as cash. Assume you are getting 2% interest in the bank. (You are probably getting less but we will use that number for easy math and to make a point.)
Over 2 years of 24 monthly payments you will have saved a grand total of $10. Big deal. Is it worth making 24 payments to make $10? Not in my book. How long would it take yo to set up an automatic withdrawal? Do you want to give the furniture store that information for $10. If you mail the payments you’d end up paying over $11 for the stamps.

If you are making a large purchase or if you are getting a much higher interest rate somewhere else then it is worth doing. But if you don’t have outstanding credit card debt (at rip off 29% rates) it is not worth doing the same as cash “deal”.

@LuckyGuy Thank you for doing the math!

I’ll sometimes use interest-free options if I want to keep my cash available. I just set up a direct debit for the amount I want to pay each month which is always more than they require me to pay. The danger is for people who can’t afford whatever it is they bought and end up still owing money when the interest-free period expires. The interest rate is very high.

If you don’t need the cash you have on hand and you prefer to pay in full at the time of purchase, I don’t think there’s any benefit to putting something on finance. The only other benefit would be for people who don’t have a credit rating yet. Then taking out an interest-free loan might be very beneficial.

It feels good to pay cash up front, “slap your wad on the counter” never question it…just do it.

Technically your co-worker may be right but personally I wouldn’t follow her advice. I prefer to pay upfront in cash and complete the deal there and then. If interest rates were very high I might do it differently but I can’t be bothered with the paperwork for an insignificant gain.

For most things (at least what John Q can afford) cash is king and will likely to be. I like cash, I pay them their money, I have my widget, and we are done. They don’t have me on a string for any length of time, they have fewer options, if any, to try and up sale me for more goods. I know when I leave with whatever widget, it is solely mine and can do whatever I wanted with it. Furniture, electronics, etc. always go down in value, you could be paying two years on a widget that is not even worth half what you are paying on.

I would have asked (I have in the past) for a discount for upfront cash. 2 years would be 20 to 25 %

@Tropical_Willie I did ask for a discount and she took 200.00 off the price.

I occasionally ask for cash discounts also. It’s the way to go.