Buy now. Pay Later?

I have used PayPal credit a number of times. It is an interest free loan for 6 months. You do not have to make monthly payments. Instead the whole amount is due in 6 months. If you pay it before that date, say a day or two, you pay no interest. If you don't make that deadline, then you pay interest at around 20%, so you would owe an additional 10% on your purchase price (20% for 1/2 year) at 6 months and one day and then I think you would be required to pay monthly plus 20% per annum on the balance.

If you are financially disciplined it is a good deal. Otheriwse it isn't such a good deal.

Here is how the PayPal Credit offer we have basically works:

You can select the PayPal credit at checkout. An instant credit check will be done. If approved there are no monthly payments required for 6 months but as long as you pay it off within the 6 months there are no interest charges. They do track the interest from day 1 and if you go past the 6 months there are monthly payments required and all the interest from day 1 is added to your account. The key is to make sure you pay it off before the 1st 6 months are up to avoid the interest charges.

Originally posted by Asangard The key is to make sure you pay it off before the 1st 6 months are up to avoid the interest charges.

+1

6 months seems like a long time, but it can sneak up on you.

If you want to avoid interest charges, start paying as much as you can as fast as you can.

Originally posted by Acetylide With that said, I would just use this as an interest-free opportunity to add to my credit history and set the whole amount aside(kind of like a secured loan) while being sure to make the necessary payments so it gets paid off within the 6-month timeframe.

Very smart. A 20% auto-pay gets you five payments and you never have to worry about it.   

Originally posted by DST4ME Never pay interest, always avoid interest, as for building credit that is a good idea as long as it involves not paying any interest Also check the fine details and make sure there are no other/hidden fees.

I disagree with the concept of never paying interest. Be willing to pay interest where the return on investment is greater than the rate of interest you pay on borrowing.

In this case using PayPal's 6 month interest free makes sense as opposed to paying cash immediately, if as in my case, I will have the money used to pay for the purchase invested at more than 0%. It makes less sense to make monthly payments where there is no interest charge, unless you don't have much financial discipline. What I intend to do, and have done in the past is wait until the day before the payment is due and pay the whole thing off.

Lest you think that PayPal is a "sugar daddy" and you are taking advantage of them, be assured that someone is paying interest on this borrowing and that someone is Digital Storm who is paying a wholesale rate which will reduce their profit on these units by a few percent

While I agree with your last paragraph, I definitely don’t agree with your statement about investing. The money to pay for my computer is invested in the stock market. If you looks at the annualized investment return on a widely diversified portfolio of common stock over the last 100 years or so, the return has been a positive 9%+.   The market has had its ups and some down, but generally up.

As a kid of 12, I convinced my mother to let me open a brokerage account and I bought a few shares of the company my father worked for. I should tell you that my parents put their savings in the bank. After I graduated from college I went to work as a tax attorney on Wall Street specializing in tax free exchanges (mostly corporate mergers and divestitures). One of the guys the Occupy Wall Streeters hated. For my last 20+ years of work I was a tax professor teaching tax and financial planning courses, all the while investing in common stocks.

When it came to saving for retirement, I invested all of my retirement savings in stock mutual funds and common stocks both in my employer’s defined contribution pension plan and my own tax sheltered savings plans. When I sat down with the human resource director at the college where I taught, to talk about pension plans and told him my intention, he said, “our employees usually put at least half of their retirement savings in the bond fund and the rest in the stock fund.” I finally said, “Are you telling me I can’t invest all my money in the stock market?” He said, ”No, but we don’t recommend it.”

I did so for 48 years even though the old rule of thumb says the percentage of your investments in safer things like bonds, CD’s etc. should equal your age. I am now 69, however none of my investments are in safe investments (savings).    My thinking was (is) this. Take any 10 year time period you want, and stocks have outperformed any other type of investment (savings) by wide margins, such that even with the periodic downturns, you will be much further ahead. Further, when I retired 9 years ago, I converted my defined contribution pension plan accumulation into a monthly variable annuity, varying with changes in the stock market. On the 20th of each month the amount my next pension check is determined by the performance of the stock market over the last month.

So how did this all pan out for me.   I am now retired. My wife and I travel the globe scuba diving and sightseeing several months a year. I have all the things that I ever wanted. Life is fantastic. If I would have chosen a different investment path, things wouldn't be quite as nice.

For some reason the stock market has developed a reputation, amongst the uninformed, as a place to lose money, much like gambling.   The corporations which are funded and owned by common stock investments create valuable assets out of human intellect and earth’s elements, and investors in these entities that are successful are rewarded.   

Well I'm a trader and inverstor and I can't not find one reputable investor/trader worth their weight that would recommend anybody to borrow money to invest, aka pay interest on an investment.

For every person you can show me that borrowed money to invest and won I can show you 20 that didn't.

That is my point/ a fact. I'm not here to argue stocks nor am I going to, I never said don't invest but will all due respect only a fool would invest money they don't have.

I do recommend everybody to invest their money responsibly in the stock market in stocks and etfs.

Edited by DST4ME - 22 Jun 2016 at 11:09pm

There was an old saying on Wall Street - You can spot a "chartist" (someone who predicts future price movements in stocks by looking at old stock price patterns) by his frayed collar and the holes in the soles of his shoe.

I personally don't borrow to invest (called buying on margin). It simply increases your risk and potentially your return. It is a technique used by take over artists like Carl Icahn and T Boone Pickens very successfully.

What I am doing here is waiting sell the stock that I would use to pay for my computer purchase for 6 months, letting Digitalstorm finance my purchase for 6 months.

You seem to be a night owl like me. My plan is to always get to bed before the sun rises.

Originally posted by DST4ME Well I'm not sure how you can properly trade without knowing the technical and the fundamental. I can assure you I got no holes in my shoes. You don't have to have a margin account you can just go borrow money and put it in the stock market, that is another horrible way of investing. for every Carl Icahn there are 100s that were not successful. btw Carl I cahn can kiss my arse I never said you were borrowing to invest either, I feel like everything I'm saying is not understood. I'm a night owl ya but then again I don't sleep much to begin with

I meant the comment about chartists as a joke. In the old days most shoes had leather soles and they did get holes. Few shoes today have leather soles.

I don't trade stocks. I buy and hold, because I believe that capital markets are efficient. I do sell covered calls against my stock positions and if they are called, I usually buy the stocks back. I only buy "blue chip" stocks and when I want to take more risk I buy sector mutual funds or sector ETF's. For new investors, I always recommend no load index funds like S & P 500 funds with low costs and great diversification.

I understand your most important point on this post and we are in 100% agreement and let me express it a little differently. Don't borrow money to buy a toy especially at 19% interest. Make sure you are in a position to pay for it before the 6 months is up, before you engage in the PayPal borrowing, because PayPal is hoping you screw up.

You seem like a very knowledgeable computer guy, so I don't want to spoil a potential friendship because we may disagree on some point. I hope to tap your knowledge in the future.

Edited by smfcpa - 23 Jun 2016 at 12:38am

Originally posted by DST4ME Actually you didn't say one thing above that I don't agree with, and you are doing exactly what I would advise a person to do, as long as you are buying the dips and holding, which exactly what the oracle does. If we don't agree on stocks then we don't agree on stocks, it has nothing to do with me/us helping you here with pcs, so please don't hesitate to ask any questions, plus we do agree on stocks and investing, like I said nothing you said in your last post that I disagree with. Investment wise everybody should be doing what you are doing, with the first 10,000 in a no load index funds like S & P 500 funds, after that its the blue chips after a little bit of homework. Having said that lets move on to pcs. What is this problem I hear with alienhell? We can probably help you here faster then Dell will

Some things we don't want to talk about, but you guys could give better help. I have never had a problem with a Dell machine before. I am hoping for a fresh start with DigitalStorm.

I have some of old work colleagues over for lunch tomorrow at 11:30 so I will sign off for now. I wonder what the original poster here plans to do? Maybe he will chime in again.