What Are Laptops On Finance?
Finance is when you choose to pay for an item over a set period of time, instead of paying the full amount upfront. Credit companies have emerged that lend you the money to make a big purchase, and then you pay them back each week or month, as laid out in a payment schedule that accompanies the credit agreement.
It's similar to a mortgage on a house or a loan on a car, but on a much smaller scale. The credit companies will usually add on an APR (Annual Percentage Rate) which means you'll pay slightly more for the product than you would if you had bought it outright, which goes to the credit company as payment for giving you the finance option.
Let's think about why people finance anything. It's simple really, a lot of us don't have the money to spend on essential but expensive items in one hit, so it's far more financially sensible, when the option is there, to pay over months and years to soften the blow, while still gaining access to an essential resource.
It may sound foolish in the outset to consider a laptop as an essential resource, but when you think about it, we'd be pretty lost without easy access to a laptop or computer. From online banking, signing important documents, getting non-emergency medical advice and everything in between, we really rely on laptops quite a bit more than we admit.
Financing products has risen to prevalence in line with an increase in luxury goods and technology. For example, the technology in our smartphones are something to behold; the new Apple iPhone 12 even has technology from NASA inbuilt into it. But that comes at quite a hefty price, and Apple and other retailers know that only a few people will be able to afford to buy these phones outright.
Therefore, to assure that everyone can purchase this wonder in modern technology, they ensure that an easy to maintain monthly payment, usually over the course of two years, is available to the consumer. This allows people to buy and own expensive goods, whether they are truly essential or not.
Different studies have also delved deep into how different generations spend their money and what they spend it on. The Modern Wealth Index 2017 study shows that Millennials and Gen Z generations spend much more of their money on comfort items and don't tend to plan for the future, with the vast majority having less than £1,000 in their savings and many having no savings at all.
With financial statistics such as these, it's little wonder why a lot of these generations must rely on the ability to finance items, lest they wouldn't be able to purchase the sought-after comfort items at all.
How Does Finance Work?
Financing an item is pretty straightforward. Retailers will work with companies that specialise in lending money to consumers for the purchase of goods and ensuring the money is paid back.
Take Curry's for example, they act as the retailer, but they don't lend the money to the customer themselves. Instead, they work with a credit company that they will refer the customer to. Now, this is all done in an instant, whether online or in-store, and it doesn't take long for a decision to be made.
Here's how it happens, step-by-step.
- You choose a product they wish to buy on finance, whether it be a laptop or a vacuum cleaner.
- You can either inform a store assistant when in-store or follow the checkout procedures that you would usually do online if you were buying the item outright.
- You will need to select the financing option from the payment methods to start the process when online.
- From here, the credit company will ask for some basic details centring around your personal, address, employment and income details. They will also conduct a credit check that will allow them to see your credit file. They will use all of this information to decide on whether to offer you finance or not.
- If the application is successful, you'll receive information about the credit agreement terms, the payment schedule and the interest that will be added on for you to accept or decline.
- If you accept the terms, the product will be given or delivered to you as it normally would, and the credit company will pay the retailer, leaving just the agreement between you and the credit company.
How Much Would I Pay Back?
The interest added on to an item ranges wildly from product to product. For example, a bed or sofa is usually offered on 0% APR, as financing is extremely common on these items, and the retailers are well-versed in providing finance.
However, other technology items like smartphones and laptops tend to have higher APR rates of around 29%, but again this can range from company to company and customer to customer. They will also have regular deals offering 0% finance for specific months or even the full term.
The interest rate can also vary depending on your credit score and report. If you have a bad credit score, credit companies will see you as far more of a risk and may increase the interest rate offered to you to protect themselves from the more significant financial risk taken.
Who Offers Finance for Laptops?
As we mentioned earlier, the retailers themselves don't actually shoulder any of the financial risks involved with financing products to customers, as a third-party credit company pay them on the customer's behalf once there is a credit agreement in place.
This has allowed the majority of laptop retailers to offer finance as an option, especially as newer, more expensive laptops are consistently released.
Gaming laptops, for example, are powered by super high-quality processors, and the beautiful imagery is created by high-powered graphics cards, making the laptops even more expensive than the top of the range laptops.
Gaming laptops cost up to £5,000, so to be able to sell these to anyone, financing is pretty much essential. You may have seen new companies like ClearPay and Klarna that have integrated directly into retailers' websites, making financing products rapid.
Can I Get Finance for a Laptop?
Your ability to get finance on a laptop pretty much hinges on your credit score and report. If you have a history of not abiding by credit agreements by paying them back in full and on time, you may struggle to gain more finance.
Similarly, if you already have a lot of credit agreements open on other purchases, the credit company may see you as too much of a risk and also not offer you additional credit despite a good credit score.
Some companies actually specialise in providing credit to those with a bad credit history. The problem with credit scores is that once they have suffered, it's hard to bring them back up.
Let's say, for example, you missed a lot of payments on a credit agreement five years ago, and it resulted in a default that you eventually paid in full.
Even though the debt has been cleared, the negative effect had on your credit score will remain. In this case, the only way to increase your score is to attain credit somewhere and demonstrate that you're able to stick to a credit agreement.
For those bad credit specialist companies, you can expect to pay an increased amount of interest, and you may have to go through a different application process involving other information about your income and expenditure.
What Are the Benefits of Buying a Laptop on Finance?
We've now explored the practice of buying a laptop on finance, but is it really the best option for you? Or should you just spend the time to save up for a laptop or high-cost product rather than take out a credit agreement?
Isn't it better to not need credit and finance to make sure your credit file is perfect? Let's find out about the benefits of buying a laptop on finance.
Convenience
This is a pretty simple point to make to start with but buying a laptop on finance is far more convenient than spending a large chunk of money at one time.
A quality laptop is going to cost at least £400, but probably a few hundred more, so it's certainly a costly purchase.
As we have seen before, a lot of people have less than £1,000 in savings, so you could technically spend a big chunk of your savings to avoid financing a product, but then you would lose the safety net of having savings available in the case of emergencies.
Buy a Laptop Straight Away
We've all been in a pickle before when something breaks without warning, leaving us no other option than to part with the cash to either get it fixed or to replace it.
But the cost of a laptop is usually too expensive to buy at such late notice. By financing the laptop, you can literally pick it up straight away with a lot of retailers and be back online before any trouble has been caused!
Take Advantage of 0% APR Deals
0% APR means that you won't pay a penny over what the price of the laptop is, meaning you've lost nothing by paying for your laptop on finance and avoiding making any costly one-off purchases.
Credit Building
As we mentioned earlier, the only way to demonstrate that you're good with your money, and in turn increasing your credit score, is by attaining credit and managing it well. If you've got a poor score or want to turn a good score into an excellent score, you won't be able to do so by avoiding taking credit.
Attaining credit and then paying it off in full and on time is how your credit file and report is built up, therefore demonstrating your ability to manage credit accounts.
What Are the Disadvantages of Buying a Laptop on Finance?
As with most things, where there are benefits, there are also disadvantages. We're going to break them down here:
Some Retailers Offer Very High APR
Some retailers will offer high-interest rates for customers wanting to pay for a product on finance, particularly those with a poor credit score.
This means you will pay well over the recommended retail price for your laptop, when you may not have needed to at all. You can avoid this by shopping around to find retailers with the best interest deals or trying to find a bad credit specialist if you find yourself in that situation.
Missed Payment Cause Damage to Credit Score
Just as following a payment schedule to the letter can increase your credit score, failing to abide by it can be detrimental to your score. Failing to keep up with your payments on your laptop will not only reduce your credit score but can lead to more serious scenarios like bailiff visits, threats of legal action and court summons.
Conclusion
Laptops are genuinely essential products for the modern world, but the price of a quality product is still very high to pay outright for.
In order to allow customers to afford these high-value goods, retailers and credit providing companies have created a system in which consumers can quickly gain finance for a wide variety of items at the drop of a hat.
While we'd all rather not have additional monthly bills, it's far better to manage your money in smaller chunks over a more extended period than struggling to find hundreds of pounds each time you need a new laptop or sofa.
If managed well and you keep on top of the agreements, purchasing a laptop on finance can be a great way to build your credit score, secure a great computer and keep your finances in check.
FAQs
Q: Can I get a laptop on finance with bad credit?
A: Yes, there are ways to secure a laptop on finance even with bad credit. You may be a lot more limited with which companies and retailers will accept you, and you also may end up paying more for the laptop when taking interest into account, but there are definitely options to explore.
Q: Can I get an Apple laptop with a bad credit score?
A: Apple laptops, called MacBooks, are available on finance and work the same as any other laptop. You can try to secure through Apple's website with their credit provider, Barclays, but you can also purchase them from other retailers like Curry's and Argos, who both offer finance as a payment option.
Q: Can you finance used laptops?
A: Certain retailers and manufacturers provide discounted versions of their laptops called Refurbished Laptops. Now, they are technically used as they have been opened by someone else, but most of the time, they are hardly used. Each returned laptop will go through a complete refurbishment from the manufacturer before being sent back out for sale.
Refurbished laptops are a great way to save some money on a particular device, and Apple is immensely popular for its refurbished products. These refurbished products are available on finance just like any other laptop.
Q: Do you need to pay a deposit at the beginning of the agreement?
A: You don't have to pay a deposit for a laptop, but some lenders will ask for the first month's payment upfront. If you do want to pay a deposit, it will reduce the cost of the credit agreement. For example, if the laptop costs £600 and you leave a £300 deposit, the lender will only finance £300, and you will only pay interest on that £300.
Q: What is a county court judgement?
A: A county court judgement or CCJ is a court order to pay a debtor back what you owe them if you haven't already. These are serious marks on your credit file that remain for six years from the date added. It will usually take a very long time to get to this stage as it is the last resort for companies to get their money back.
