Every year, Black Friday is full of deals that make you want to say, “I'll take it.” Especially when you see something advertised with an attractive monthly credit instalment like “only R1,199 a month.” That might look manageable at first glance. But before you sign up for that store account or credit agreement, ask one more question:
How much will I pay altogether?
Because when you buy something with credit, the price on the shelf isn't necessarily the final price you pay.
Look beyond the monthly cost
Let's say you find a laptop for R5,999. Paying R5,999 upfront is easy to understand. You pay R5,999 and the laptop is yours.
But if you buy it with credit, you might spread the payments over several months. Now the important number isn't just the monthly repayment. You also need to know how much you'll pay over the full repayment period, including interest and other charges.
A lower monthly repayment can also mean a longer repayment period.
So don't just ask:
“Can I afford R1,199 a month?”
Ask:
“What will this cost me in total?”
That's the number that tells you what you're really paying for the purchase.
Ask these questions before you borrow
Credit doesn't have to be complicated. Before you agree to anything, make sure you know:
1. What's the total amount I'll repay?
This is the big one. Ask for the total cost over the full repayment period, not just the monthly instalment.
2. How long will I be paying?
R1,199 a month might sound better than R1,800 a month, but if you pay the smaller amount for much longer, you could end up paying more overall. For example, R1,800 over 12 months = R21,600 and R1,199 over 24 months = R28,776.
3. What interest will I pay?
Interest is one of the costs of borrowing money. Your rate can affect how much you pay over the duration of the credit agreement.
4. Are there other fees?
Ask about any initiation fees, monthly service fees, insurance or other charges. They can add to the total cost.
5. Can I afford the repayment every month?
Don't only think about whether you can manage the first payment.
Think about the next six months, 12 months or however long you'll be paying. Your other costs won't disappear because you bought something on credit.
Don't let Black Friday do the thinking for you
Black Friday deals can make you feel like you need to act quickly.
“Only R1,199 a month.”
“Last chance.”
“Limited stock.”
But a deadline doesn't mean you have to skip the important questions. Take a moment to work out what the purchase will really cost. Then decide whether it's worth it. And remember, the same applies whether you're buying a new phone, replacing a broken appliance, paying for a big family expense or borrowing for something you've wanted for a while.
Credit might make a purchase possible today. But you'll still be paying for it tomorrow.
Use your credit card wisely
If you already have a credit card, Black Friday can be a good reminder to check how you use it.
Try to pay off your full balance every month if you can. If you only pay the minimum amount, you'll carry the remaining balance into the next month and could pay interest on it.
It also helps to know exactly when your payment is due. Missing a repayment date can lead to late fees and interest, while paying on time helps you avoid unnecessary costs.
Paying your credit card on time and managing it responsibly can also help you build a good credit history over time. That can make it easier to show lenders that you can manage credit responsibly when you need it in the future.
Know your credit position too
Before you apply for credit, it helps to understand where you stand.
Your credit score can affect the credit offers and interest rates you qualify for. JustMoney's Credit Health solution lets you check your credit score for free, view your credit report and see personalised credit offers based on your credit profile. You can also get an instant quote for a personal loan.
That gives you more information before you commit.
You can also download the JustMoney app for Android if you prefer to manage your credit from your phone.
Before you buy that deal
Take a second look at that “only R1,199 a month” offer this Black Friday, and go through this 5-step checklist:
What will I pay in total?
How long will I be paying?
What interest and fees will I pay?
Can I comfortably afford the repayment?
Do I really need to buy it now?
Once you know the full cost, you can make a choice that works for you. Not just one that looks good on a Black Friday price tag.
Because a good money choice isn't only about getting what you want.
It's knowing what you'll pay for it.
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