When the sales are on it can be really tempting to snap up as many bargains as we can. However, we may not have the money available to do this and so it can be tempting to borrow money to be able to afford it. The most common ways of doing this are store cards and credit cards. However, is this a sensible way to get bargains?
Costs of borrowing
Firstly it is important to know what the costs of borrowing the money will be. You will be able to work this out if you look at the terms of the loan. It should give you a percentage interest rate (APR) and you will be able to multiply this by the amount that you are borrowing to calculate how much interest you will pay each year. Then divide it by 12 to calculate how much you will pay each month. You then need to estimate how long it will take you to repay the debt and ad up how much interest you will pay over this time.
Savings made from sale
It is then important to work out how much you are saving by buying this item in the sale. Calculate the actual amount you save, often you will see the percentage discount but you need to work out the actual discount. Be careful though as some items can often be sold at a discounted price anyway so you may not be saving as much as it seems. For example, if you buy a sale item from Amazon, you will often find that it tends to be sold at a lower price all of the time anyway and so the reduction may not be as much as it seems.
Work out the difference
It is then important to work out what the difference is between the savings you make on the price and what you pay for the loan. Especially if using a company like Emu payday loans
. If you end up paying more for the loan than you are saving for the reduced price then it is not worth buying the item as you are paying more than you would if the item was full price. If it is dearer then wait and save up for the item because then it will be cheaper compared with borrowing to buy it and you never know, there might be another sale at the time that you can afford it.
Do you need the items
It is worth thinking about whether you really need to buy the items. We can be really tempted to buy things because they are reduced and look like a bargain even if we do not really need them. It is wise to try think about whether we would have bought the item at full price and why not. If we would have but we just could not afford it or decided for it to get cheaper then that makes sense but if you had not thought about buying it until you noticed it was reduced then think about your motivation. If you are motivated because you will save some money think about how much more you will save if you do not buy it at all. It can be hard to distance yourself like this though. You might feel that you deserve to have a treat, but it is worth trying to see through that marketing of the company trying to get you to buy their product and realise that they are just trying to get money out of you. They want you to feel that they are on your side and doing their best for you but actually they just want to make money from you and it could be that you will be happier if you do not buy the item from them.
Can you wait?
Another consideration is whether you can wait to buy the items. If they are something that is always available to buy then perhaps you can wait and see whether the price goes down even more. While you are waiting you could save up so that when the price is reduced again you will not have to borrow the money to pay for them but you will be able to afford to buy them using the money you have saved instead. Then you will have no additional borrowing fees to worry about. Obviously if the item is end of stock sale or it will go out of fashion then this is more difficult. It could be that you will not get the chance to buy it again. If this is the case then make sure that you are really sure that you want to buy the item and that you are not just feeling that you have to have it because you will not have the opportunity to buy it again.