Vendors Offering Financing - Do You Support It?

[Bob Weigant]

I have no problems with it and I’ve done it. It’s your life and money and it’s not up to me to judge how you live or support your hobbies.

 

[NS Mike D]

That's good information. I'm always scratching my head with the credit score thing...great credit so I can put more stuff on credit....I don't want more debt, LOL. If you don't use credit you are an unknown risk to lenders.

I even cosigned on a loan with my wife last year and my credit score can't get much higher.

It is complex and there are some counterintuitive aspects to FICO. Then add that FICO intentionally keeps it's algorithms a secret to keep people from gaming the system.

 

[mike550]

It does increase sales and they are typically affinity deals, meaning that they are not the the lender but rather a marketing partner for the underlying bank who pays the store a fee arrangement

Some large stores used to set up their own bank and hire a credit card bank to run the operations, They would sell off the cards to wall street (ABS) to generate more cash to lend and generate profits to boost flat retail sales.

Thanks Mike! So do you think the store gets 100% of the sale price? I’m guessing there’s a discount of some sort since some portion of the people who finance will default. And honestly, who gets sent to collection for a $300 item.

 

[NS Mike D]

Thanks Mike! So do you think the store gets 100% of the sale price? I’m guessing there’s a discount of some sort since some portion of the people who finance will default. And honestly, who gets sent to collection for a $300 item.

The store get the full sale price. The lender is is the one taking the risk. The lender manages the risk by setting aside interest and fees they collect in reserve to cover losses. Introductory rates are considered marketing costs and paid out of the total pool of interest and fees collected on all cards.

The lender is counting on a significant percent of customers not repaying the money within the 0% time frame, as which time they will charge 25%-30% and that typical customer will likely use that line again when the balance lowers.

The entire credit card industry is based in the rule of 2%. The minimum payment is usually 2% of the balance. It's a number that the customer perceives they can afford month to month. But it's a number that the customer will never repay in full. 30% can cover a lot of charge offs.

 

[tnyr5]

NS Mike D is going a great job explaining all the details the vendors are going to conveniently gloss over: "Now you can get corals interest-free instead of paying 20% through your credit card!"

Let's also just address the elephant in the room: this will be a roundabout excuse to raise prices.

 

[Jedi Knghit]

The store get the full sale price. The lender is is the one taking the risk. The lender manages the risk by setting aside interest and fees they collect in reserve to cover losses. Introductory rates are considered marketing costs and paid out of the total pool of interest and fees collected on all cards.

The lender is counting on a significant percent of customers not repaying the money within the 0% time frame, as which time they will charge 25%-30% and that typical customer will likely use that line again when the balance lowers.

The entire credit card industry is based in the rule of 2%. The minimum payment is usually 2% of the balance. It's a number that the customer perceives they can afford month to month. But it's a number that the customer will never repay in full. 30% can cover a lot of charge offs.

Banks charge the merchant a percentage based fee for each credit card transaction too. I believe it is typically in the 2-3 percent range. I assume the same applies to these credit offers.

 

[vanpire]

I have no issues with choices and financing.

My worry is that offering finance enables the vendors to charge ever higher prices.

 

[NS Mike D]

Banks charge the merchant a percentage based fee for each credit card transaction too. I believe it is typically in the 2-3 percent range. I assume the same applies to these credit offers.

yup. a totally different industry - merchant processing. ie. visa and master card. It's confusing but think of the credit lender and different from the settlement system, the settlement world is how the money actually moves to the vendors bank account, ie the swioe machine at check out

 

[NS Mike D]

I have no issues with choices and financing.

My worry is that offering finance enables the vendors to charge ever higher prices.

if it creates a high enough demand. Vendors are looking at increasing sales, rarely do affinity cards shift the demand curve to the point they can raise prices. It leads to more repeat business of customers. I have the xyz card so I'll but from them and not abc.

They can also offer discounts to affinity card holders as they can track repeat customers.

 

[L1g_reefer]

my respectful opinion: if one needs financing in this hobby, priorities seriously need to be reviewed.

True, but possibly $800-$1000 dollars just for lighting on a 120 gallon aquarium, not to mention other costs could add up to around $5000 for just equipment on that 120. Now sure your going expensive but maybe somebody doesn’t want to pay that up front, and it also opens up the window for somebody who wouldn’t be able to have nice equipment to pay for it over time.

 

[Waynerock]

I'm split

On one hand I do believe if you need to finance anything in this hobby you need to seriously reevaluate your priorities. Excuses like something broke and I didn't have the money for it just underline the existing problem of scraping by and getting into a very expensive hobby one your wallet is telling you you can't afford. If you cannot immediately replace a broken piece of equipment without a loan you are living above your means.

On the other hand these are hard times, folks who might have been OK 2 weeks ago are now struggling. What ever cookie jar money there is going to essentials instead of hobbies. It's nice to know someone out there won't have to choose between groceries and their tank in case something goes wrong. It's isn't ideal but I'm sure some folks will benefit from it.

I had my return die a day after I had to pay and arm and a leg for my daughters Flute. Cash only sale but too good to be passed up. I could of afforded the 100 Sicce just to get buy but I wanted to replace it with what went out (used purchase 1 ran for 2 years and who knows how long before). So that's 280.00 for new varios 4 plus the 100 for the just get by pump or

I have no issues with choices and financing.

My worry is that offering finance enables the vendors to charge ever higher prices.

I agree I looked at WWC last night and it seems like there already high pricing just went into overdrive! 200-300 scolys elseware are over 5-6 hundred now. I hope this is not a sign of things to come. I never bought from them before because of the pricing and photo trickery. I cant believe people are feeding the demon, its gonna grow and spread.

 

[jose hernandez]

end of the day we are gonna pay for it one way or another it just depends on the person u pay now or pay a little more overtime the rates are not to bad on affirm depending on the individual like someone mentioned before the intrest rates on some credit cards are much higher u ask me paying overtime is a little better dosent hurt the wallet as much

 

[fish farmer]

Thanks Mike! So do you think the store gets 100% of the sale price? I’m guessing there’s a discount of some sort since some portion of the people who finance will default. And honestly, who gets sent to collection for a $300 item.

I actually got a collection notice for a $50 bill I never saw. I'm sure it came in the mail but got "lost". The person I was living with wasn't very responsible. I sent payment right away. It dropped my credit score at least 50 points and took two years for it come back up.

So pay your bills one time and pay them in full if you can .

 

[fish farmer]

I had my return die a day after I had to pay and arm and a leg for my daughters Flute. Cash only sale but too good to be passed up. I could of afforded the 100 Sicce just to get buy but I wanted to replace it with what went out (used purchase 1 ran for 2 years and who knows how long before). So that's 280.00 for new varios 4 plus the 100 for the just get by pump or

I agree I looked at WWC last night and it seems like there already high pricing just went into overdrive! 200-300 scolys elseware are over 5-6 hundred now. I hope this is not a sign of things to come. I never bought from them before because of the pricing and photo trickery. I cant believe people are feeding the demon, its gonna grow and spread.

Well..if you didn't have the daughter...you wouldn't have to buy the flute...just saying. I don't have kids by the way...people tell me they are expensive and take up a bunch of space, my wife any I would rather spend that money on other crap .

I saw Unique Corals also had financing.....hmmm.

 

[Waynerock]

Well..if you didn't have the daughter...you wouldn't have to buy the flute...just saying. I don't have kids by the way...people tell me they are expensive and take up a bunch of space, my wife any I would rather spend that money on other crap .

I saw Unique Corals also had financing.....hmmm.

If I did not have kids I would have a lot of toys and time to use them. Thats ok children are a blessing

 

[Streetcred]

Each to his/her own ... everybody's financial circumstances is different and this should not be a reason to lock people out of the hobby. The early pioneers of our hobby were not 'elitista' so neither should we be.

If vendors can help people get into the hobby or be better reefers, then all strength to them. There are economic benefits in this for all reefers.

 

[Bob Escher]

I don’t think it’s wise to finance any hobby items. House, car sure you need those. Maybe even a new bed. Beyond that.. Nope

Haven’t seen you on here Before ( not that I pay Attention) but looking at your name. Thank you for your servive

 

[Bob Escher]

As someone else said
what the difference between Credit Card payments or financiomg? Maybe interest is a little more?

 

[elishapep]

everbody knows there own finances .or at least they should...with that being said..some things can get a little pricy so if you are dropping a few thousand at once it is nice if it can be broken up into a few payments Even if you have the money .. it is eaiser to look at 800x4 payments leaving the bank account then 3200 in 1 shot. Lol

 

[pharazon]

A vendors sole purpose is to be profitable. Financing options undoubtedly boosts sales and therefore profits.

It is not a vendors duty to ensure their customers are being fiscally responsible or making financially sound decisions.

It’s a hobby - just like traveling, boating, off-roading, automobiles, motorcycles - things people finance all the time. Is it financially irresponsible to finance a trip to Europe? Well, that depends on the person footing the bill. But it’s not the airline’s responsibility to govern that.

People are going to spend money, whether responsibly or not, and I don’t think the vendor has any duty or responsibility to oversee that.

If I have a Money Market account that yields 2% annually, and I can finance something at 0% for 12 months, you can bet I’m going to leave that money in the bank and take the financing.

Worry about your own money - I’m sure you don’t like people telling you how to manage it.