If we need to get our cars repaired then we often find that it can be expensive. Not only do we have to pay for the parts but also pay the person to fix it and then they will often find other things that need fixing s well and the price can really escalate. This means that it can become unmanageable with regards to finding the money to pay for it. Therefore we may look to borrowing to pay for it and consider using a credit card.
The way a credit card works
Many people do have credit cards but it is still worth having a full understanding of how they work. The cards are often used as a convenient way of paying or things without much thought about the costs of them and how they actually work. If you have a card you will be aware that when you buy things using it you do not have to pay for them right away. You will get a bill and then be given a certain time to pay it by. You will be given the option to pay just a minimum amount which will usually only cover the interest and charges on the card and possibly a little more. Or you will be able to pay off the full balance if you prefer. There is also the option to pay off any amount in between this as well.
Cost of using a credit card
Every time you do not pay off the full balance of your credit card you get charged interest on it. These costs can really escalate. However, card companies make it hard for us to pay it off as they seem to only give us the option to pay off all that we owe or the minimum amount. We can pay off something in between, which might more affordable than the full balance and will mean that we will not have to pay so much interest and we can get nearer to paying off the debt. Of course it in their interests for us to keep the debt as long as possible so that they profit more from us. They also make it easy for the debt to build up because so many shops accept credit cards and it is more convenient to use them compared with cash.
Credit cards vary in the amount that they charge and it is important to be aware of how much you are paying for yours if you are not clearing the debt each month. Of course if you do clear the debt each month then using a credit card can be a great advantage to you. You get longer to find the money to pay for things and if you set up the timing on the billing well, you will have just been paid when the bill comes in which will make it easier to pay.
Is there an alternative?
So if you use your card wisely then it can be a great way to pay for the repairs. If you use it and then pay the card off in full when you get the bill, then you will not pay anything out in interest, However, you may be able to afford to do this and this is where things can get tricky.
To start with think about whether you need the repair right now or whether you can wait until you have saved up for it. Maybe you can go without using the car for a while or maybe it will be safe enough to drive without being repaired. If you are not sure about how safe it is then do not risk driving it as you could end up regretting it. You could check with the garage that you are going to get the repair from as they should be able to tell you.
If you have any savings then use these to pay for the repair as it will be a cheaper way of funding it than a loan. If you do not have savings then you may be able to get an advance on your salary to cover the cost. Alternatively a different type of loan might be cheaper. Compare the costs of different loans to see, if you do borrow the money, which will be the cheapest for you. Even with a credit card you may find that there are cards that are cheaper than yours. It is therefore good to do a bit of research and make sure that you are not paying out more than necessary as even if you do use a credit card and do not pay off the full balance you could still pay less than you will with your current card. It should not take that long for you to find out either.
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.