You have to be really smart when opting for payment plans. Many would appear to be affordable with the first glance since you might be thinking of the impact of each payment to your paycheck but you also have to consider the overall impact on your finances.
Paying everything up front maybe scary since you get to absorb the full cost right away. In such an occasion where there will be no price difference in the total cash out against the total of installment plans, getting things at 0% interest is a good deal indeed.
However, if the payment plan involves paying interest, then you have to check how much you’ll have to spend in total.
With larger purchases that would require you to take up a loans (including mortgage) like with car and home purchases, you might be losing quite a lot with interest alone.
For cars, for example, zero down payments and small monthly payments often translate in longer terms and thousands
in interest. Combine that with the money you lose in depreciation and you might notice that you’ll end up paying for two cars.
The best way still is to pay as much as you can up front (full purchase, if possible) and draw it out with prime consideration for your monthly budget so as to minimize the money lost in interest.
Always think of the whole and longer term impact.
