Up to 15.31 percent interest
Be careful with online retailer installment loans
5/5/2022 3:04 p.m
If you don’t have enough change in your pocket, but still want to satisfy an urgent desire to consume, you often use an installment loan. But if you use the retailer’s installment purchase option when shopping online, you sometimes pay a lot more.
Basically, the idea of financing a purchase with an installment loan is sometimes not a bad idea. At least if the purchase per se cannot be postponed until financially better times and is otherwise made via an overdraft.
But even such an installment purchase has its pitfalls, at least if the debts are not repaid. This can also be due to the fact that the interest burden is then too high. Which is the case with many large online shops that offer their customers an installment purchase option. But if you use this payment option, you sometimes pay up to a third more. This was the result of a sample analysis by the comparison portal Verivox. According to this, for the installment financing of an online purchase amounting to 5000 euros with a term of 4 years, interest of almost 1600 euros is due at the top. The cost of a cheap bank loan would be a good 1300 euros lower.
Interest rate of 15.31 percent
For the analysis, the standard conditions for installment financing were evaluated at the three online retailers with the highest sales, Amazon, Otto and MMS E-Commerce (mediamarkt.de and saturn.de). For an installment purchase at standard conditions, consumers pay between 7.69 percent and 15.31 percent interest at the three dealers. This makes purchasing up to 32 percent more expensive. This was the result of the calculations for two model financings. With the first installment purchase, a purchase value of 2500 euros is financed over a period of two years. With the second installment financing, a 5000 euro purchase is paid off over a period of 4 years.
The financing costs are highest at Otto. The installment financing of the 2500 euro purchase has a total interest cost of almost 390 euros. At an interest rate of 15.31 percent. Customers pay 15.2 percent interest here for 4-year installment financing. With a goods value of 5000 euros, this results in additional costs totaling 1587 euros.
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Customers of the online shops of Media Markt and Saturn pay 8.49 percent interest for both model financing. For the 5000 euro purchase, this results in additional costs totaling 879 euros, with installment financing of the purchase with a goods value of 2500 euros, the interest costs add up to 218 euros. Amazon customers can finance the same amount at an interest rate of 7.69 percent and would pay a total of 198 euros in interest over 2 years. For the 5000 euro purchase, however, they would have to switch to another payment option. Amazon only offers installment financing for purchases up to 3000 euros.
“Although installment financing directly through the dealer is convenient for customers, it is often very expensive and inflexible,” says Oliver Maier, Managing Director of Verivox Finanzvergleich GmbH. “In particular, consumers can finance larger consumer needs much more cheaply with a retailer-independent bank loan.” Cheap banks grant an installment loan of 5000 euros with a term of 4 years at a fixed interest rate of 2.28 percent, independent of creditworthiness.
If you are looking for the best installment loans without residual debt insurance, you will find them on the ntv comparison calculators.