George Kamel - There’s a BIG Catch to Zero-Interest Loans

Starting point is 00:00:05 Have you ever seen the price of a zippy new Nissan Rogue and thought, can't afford that? Only to have sales rep Steve come to the rescue with a no-interest loan. Maybe it was that classy Samsung Frame TV, a gravity-defying purple mattress, or the new titanium iPhone 15 Pro. Whatever the splurge was, I'm guessing you responsibly hesitated for about 3.5 seconds

Starting point is 00:00:23 before taking up Steve's offer. Low monthly installments with absolutely no interest, where's the downside? It's such a good deal that the only thing left to say is, you've been punked. Ashton Dax, come on in, guys. We got them. Yeah, 0%.

Starting point is 00:00:36 Got them. Classic. How do you feel about getting pumped? So it's time you learn that there's always a catch to a loan or a credit card with no interest financing or 0% APR. And today, I'm going to help you avoid feeling like the back end of a horse costume by explaining why these deals aren't nearly as good as they sound. And if it brings you any joy at all to watch me expose agents of deception in our financial ecosystem, please hit those like and subscribe buttons as we get started. All right, the big catch with zero interest loans or 0% APR is this.

Starting point is 00:01:02 They will cost you as much or more than the financial. a traditional loan. Lenders just get money out of you in different ways. How? Well, for starters, they lure you into overspending by a lot. Heck, they genetically modified these loans and deals for the specific purpose of getting you to make impulse purchases you can't afford. And by can't afford, I mean you can't pay for the thing in cash right now without going into debt or neglecting your other financial responsibilities. When you make the mature decision not to purchase something because you don't have the cash, retailers don't see a modern day hero. They see a lost sale. And they're looking for ways to un-lose that sale.

Starting point is 00:01:38 And they figured out that if they can't get you to hand over part of your paycheck today, the second best thing is getting you to sign over part of your next paycheck today. Or your next 120 checks. And zero-interest financing is the bait they shamelessly use to get you to do it. And that's just the first catch. But wait, there's more ways you're getting screwed. Like the buffer that gets built into the price of that Wi-Fi-compatible smart fridge, since the store knows they won't be making their typical interest off of your financing.

Starting point is 00:02:03 Not only do these no-interest deals make you impulsively buy things you can't afford, but they also make you overpay for those things. And car dealerships are the perfect example of this. We got fosters. We got Suzuki. Bees! They often require you to pay the sticker price of the car, also known as the manufacturer's suggested retail price, or MSRP,

Starting point is 00:02:21 in order to get that 0% APR. That means no deals, no discounts, no negotiating, you're paying full retail price. And that MSRP can be thousands of dollars above the price you could have negotiated, if you were to pay cash. And never forget, salespeople are in the business of making money. Hashtag get that commish, right? Steve, Steve knows what I'm talking about. Dude, seriously, leave me on to this. And in the spirit of making money, salespeople will be sure to suggest

Starting point is 00:02:46 expensive upgrades and extras, which will be easier to sell you on, since they're just bundling them into your 0% monthly payment. Think about it. The maintenance plan is only $7 more a month. Sounds way better than, well, it'll set you back another $460 bucks today. Like grandma used to say, Don't get bungled on a bundle. My grandma said in Arabic, so didn't have quite the clever snappiness. Love you, Teta. Plus, they'll likely try to tack on hidden fees during the process to once again help increase

Starting point is 00:03:12 that total sales price. And before you know it, you've impulse spent yourself into a hefty loan on something you couldn't afford in the first place. And you better hope nothing unexpected pops up that keeps you from making those payments because if it does, you're going to learn the difference between no interest and 0% APR the hard way. Which brings us to today's financial pop quiz. no interest for 12 months, the same deal as 0% APR for 12 months. Go ahead and lock in your answers.

Starting point is 00:03:37 And while we wait, let me tell you about our sponsor of today's video, Delete Me. Look, we both know that your personal data is floating around out there somewhere in internet deep space. And it's only a matter of time before some greedy fraudsters or scammers get a hold of it and open up a 0% APR line of credit to furnish their villain layer bungalow. And that's why Delete Me is committed to scrubbing your info from data broker sites before the bad guys get to it. They'll even send you an easy-to-read report so you can monitor how quickly your online memory is being forgotten. And right now, you can get 20% off any of their plans by going to join deleteme.com slash George, or just click the link in the description.

Starting point is 00:04:12 That's join delete me.com slash George. And if you're looking for deals without a catch, don't forget to check out wireless service provider, Telo, another sponsor of today's video. Their phone plans start as low as five bucks a month. That's less than a Starbucks summer skies refresher with raspberry-flavored pearls. Phone service for less than a glorified high fructose flavor juice, sign me up. And if you're a tech snob like me, you can go all in with unlimited everything for just 25 bucks a month. Plus, TELO's high-speed nationwide coverage comes with no fees, no contract, no commitment. You can save those commitment issues for your ex and your weekend brunch plans.

Starting point is 00:04:45 Don't delay. Go to tello.com slash George and get an extra five bucks off their unlimited data plan for your first month of service. Or just click the link in the description below. All right, let's check your work on my pop quiz about no interest for 12 months. versus 0% APR for 12 months. Plot twist, pretty epic difference. Well, I did not see that coming. If you get a loan or credit card with no interest for 12 months, that means you don't have to pay interest for the first 12 months.

Starting point is 00:05:09 Thank you. But it doesn't mean that interest isn't being calculated in the background for you to potentially pay later. Little sales rep Steve didn't mention that fine print, did he? Too busy showing off that wireless charging of the Nissan Rogue. Lies and smears and slander. And get this, if you pay the balance off perfectly in full by the end of that 12-month promotion period, you might make it out unscathed.

Starting point is 00:05:33 But if you don't, you're on the hook for all of the interest that's been adding up since the day you purchased the item. And of course, it's usually a sky high rate you would have never agreed to. We're talking 20% or more. Here's what's wild. Even if you only have a 25 cent balance left on the loan at the end of that 12-month promo, you still owe interest on the full amount from day one. So all this dirty deal did was defer to the interest in delay the money. pain until later. And side note, if you see a deal that says 12 months same as cash, that's the

Starting point is 00:06:01 same exact thing. Now, on the other hand, zero percent APR for 12 months isn't covertly piling up interest behind the scenes and cheering for you to fail. But if you have any balance left over on that loan or credit card at the end of the 12 months, you'll start getting charged interest on it immediately. And again, these rates are not pretty. These lenders are trying to make up some of the profit they lost in your 0% era, and they will get you. They always get you. Now, I know you think this won't be you. You'll be the person who pays this thing off inside the promotional window perfectly. Of course you will. You're a perfect human being who's never made a financial mistake. Why would you start now? I can detect that note of sarcasm unless the lenders have

Starting point is 00:06:38 anything to say about it. They will set you up to fail in any way they can. Just check your loan payoff date or the minimum payment date if you have a credit card. There's a good chance that your payoff date and the end of your no interest promo period are mismatched like a pair of rogue socks. This means that if you follow the payment schedule perfectly, your interest-free promotion will still end before you've paid the loan off in full, which triggers interest payments of some variety. And to avoid all of this, you would need to sneak in a few early payments,

Starting point is 00:07:03 which you may not have budgeted for. And what if, God forbid, life happens and you can't pay back every single dollar of every single payment right on time? And let's be real, this doesn't have to be as monumental as job loss or income change. Maybe your kid needed new braces. The bonus didn't come through on time.

Starting point is 00:07:17 You forgot to transfer some extra money. These companies don't give a rip. All they see is that you're a little bit behind on the payments and they go full Spanish telenovela on you. Mas drama. Who needs real housewives? The fake Spanish drama is more real than the real housewives drama. What is real anymore?

Starting point is 00:07:38 There's going to be late fees. There's going to be an immediate end to your promotional period. And there might be debt collectors calling your home or even tracking you down at work. And knowing that you've got to pay the Piper every month is a burden that already lives rent-free in the back of your mind. But it's way worse when you know anything less than perfection can dramatically change the terms you think you signed up for.

Starting point is 00:07:56 And if you have a loan, credit card with one of these no interest promotions. Let me say this. I love that you want to avoid interest. I really do. I think you're on to something here. But the only real way to never pay a single cent in interest ever again is to pay for things upfront, in cash, in full with your own money. That's the way that grandma tended. And I know, this is a huge paradigm shift, so let me give you a second to adjust. Okay, moving on. I'm not ready. These zero interest deals are nothing more than a sick game. A game that banks and other lenders have

Starting point is 00:08:25 learn are very profitable for them to get you to buy shiny, brand new things that you don't have the money for right now. And the best way to protect yourself from stupid games is to not play them, including the Dream Day Starbucks summer game. Oh, look at that. I got to play. Ooh, I won 25 stars. Only 3,000 more and I can get an overpriced stupid drink. That's a good deal. Now, if you've already found yourself on the business end of one of these crappy deals, do not despair. You can still make a comeback and get the win if you're willing to put in the work. Just take a deep breath and check out this video to learn about the debt. payoff method that worked for yours truly and about 10 million other people. I'll drop a link to

Starting point is 00:08:59 watch in the description too. Thanks for watching. We'll see you next time.

George Kamel - There’s a BIG Catch to Zero-Interest Loans

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.