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Low down payment, low monthly payments. Nothing down, minimum monthly payments. No money down, no payments until next year.

Let me ask you a question. Do you think retailers and dealers make these offers because they care about you and just want you to pay as little as possible for their goods? Do you think there is a reason they structure financing in such a way so that it makes it "affordable" to you RIGHT NOW? Do you think they have a profitable reason to allow you a low down payment, and minimum monthly payments?

Low or No Down Payment

Why do you suppose they offer this? Because they want you to get the best deal, right? Puh-leeze. C’mon… how many times have you walked away from a salesman convinced you got a "great deal"?

Offering low, or no, down payment is a way to get people to buy impulsively when they simply do not have the financial means on hand. It is a way to get people to COMMIT their FUTURE to the creditor. "We can’t get yesterday or today’s money… but we can get what you make tomorrow."

Low Monthly Payments

Out of the goodness of their heart, we are offered the lowest monthly payments possible, right? The terms are extended to longer periods of time, years and years. Payments are delayed for months or even a year. Why?

By allowing you to have "low monthly payments" you are more likely to buy NOW, more likely to buy MORE, and more likely to buy something without really thinking about the long term.

By allowing you to have "low monthly payments" creditors are assuring that the principle amount of the loan is paid off very slowly, thus maximizing the amount of interest you pay (as well as late fees, service charges and other penalties).

The Overall Effect

Because you are using very little down payment, the creditor will probably charge you a higher interest rate right out of the gate. Not only will you start with a higher interest rate, you will be paying it on a LARGER beginning principle amount. Even if you don’t get charged a higher rate, you’re still taking out a bigger loan which is more profitable to the creditor.

By making the smallest monthly payments possibly, you maximize the amount of interest you are paying while making sure the principle is paid off as slowly as humanly possible, if at all. It’s not uncommon after interest charges, late fees, and other penalties to have your principle stay the same, or even grow.

The overall purpose is clear:[TIPJAR]

  • Attract people to buy regardless of their ability to afford it, or financial discipline
  • Make it easy to buy even when you don’t have the cash in hand
  • Get people to buy NOW rather than waiting (giving them time to reconsider)
  • Get people to commit FUTURE INCOME to the creditor
  • Maximize the size of the loan
  • Maximize the interest rate, fees and penalties
  • Minimize the amount of repayment so that the principle is slowly or never reduced.

Folks, learn this lesson: CREDITORS DON’T OFFER YOU A "DEAL" BECAUSE THEY GIVE A CRUD ABOUT YOU. THEY OFFER YOU A "DEAL" BECAUSE IT MAKES THEM MONEY… LOTS AND LOTS OF MONEY. You are committing your future income production to them. They are HAPPY to give you something NOW in trade for a lucrative portion of your income LATER.

There is only one good payment plan: 100% down, no monthly payments.

What are your questions about these "deals"?