O% finance deal from B&q; is it as my DM thinks the work of the devil or a good idea?

[Yorkiebar123]

I'm considering get a finance deal with B&q for a new kitchen, is there any reason why finance deals are a worse idea than credit cards? My DM was genuinely horrified by the idea! It is a 2 year 0% deal. We have 2 good salaries but no savings and our kitchen is falling apart.

If it is a 0% option then the monthly payment to pay it off will be less than 2 years eg 100 per month for a 5000 "interest free". This means that if you pay the 100 pm for the 2 years you will have paid 2400 and still have to find 2600 to pay the loan off. If you go 1 day over the interest free period then you you will need to pay the interest for the entirety of the "option" period - typically 5 years (2 for interest free period and 3 for the option period) at a high interest rate....think 39.9% apr.

If you do do it make sure you set up a standing order to make up the difference. In the example above it would be 108.33 x 22 plus 108.34 x 2 payments. If there is any outstanding money (even a penny) the interest becomes due.

There are different types of finance deals available.. I worked for a jewellers who sold 'buy now, pay later', or 6, 12 or 24 months interest free (depending on cost of item). The better deal is my eyes in the interest free monthly contracts as there was no risk of added interest at the end of the fixed term.

We've bought engagement/wedding rings and bed/mattress on 0% interest via direct debit from big name retailers..

Read the fine print, fully understand how the contract works/terms & if you're happy with that then enjoy your new kitchen :)

If the deal is that you pay the kitchen off in full over the term and it is 0% then great, go for it. I bought a £9000 kitchen from Homebase in 2011 and paid it off in full over 3 years at 0%. The money is better off in your bank than theirs! We've just done the same with some furniture from Next. If it's a genuine 0% finance deal I don't understand the horror. Perhaps he's confusing the loan with store cards which tend to charge an extortionate rate.

The downside is that you are still borrowing from your future self, so if you lose a job or became ill you'd still have the debt hanging around your neck.

I had some sofas on interest free for 24 months once, what I did was pay the monthly payment AND save that amount again each month. I was then able to pay the sofas off in full in 12 months and it made me feel more secure about the whole thing.

That's a good idea Vada, I already have some saved but need it for if the builders rip the floor up and discover wood rot or some other worst case scenario. Will getting it on credit affect my credit score?

maybe its the '2good salaries but no savings' part that makes her twitchy? otherwise, a genuine 0% is better than a credit card debt surely? both are a problem if you lose your job or need additional spends suddenly though

We'd still be ok even if my partner lost his job, I'm extremely frugal and have renovated the rest of house on just my income, hence no savings! I don't want to get a credit card as I know there would be a temptation to use it after the kitchen was paid off.

It would go on your credit report as it is debt but if you don't have other debts I wouldn't think it would have a negative impact.