Comment by barbazoo | Hacker News Reader

Comment by barbazoo | Hacker News Reader

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> ay you bought a new £800 stand mixer on Black Friday. Splitting the costs in 3 allows you to deploy the funds elsewhere, such as investing in an index fund, buying bonds or put into a CD account or anything productive to offset some of the cost or if you are lucky, cover it.

Those 0% financing offers only exist because interest rates are extremely low. I don't know about others but you know what else is low these days? The return on my index funds. If I invest those £800 now, I miss out on what, £8 over the course of a year? Compounding that makes very little difference at retirement age but for many of us, the mental overhead to manage these loans and the chance of taking on too much (interest rates will go up again) and making a mistake is just not worth it. Besides, if you BNPL you wouldn't want to park that money somewhere volatile anyway, an index fund, what if interest rates rise and you need that money all of a sudden but your index fund didn't gain anything. All of a sudden you lost money. Maybe I just don't get it, I'm happy to learn if there's a flaw in my thinking here.

So you buy a stand mixer, make a bunch of dough, bake some bread and sell them. Plenty of ways to offset the cost. The how is not important, the important thing is you can. The worst it can happen is you have to pay exactly the labeled price some 3 months later.

If you're a business, I get it. Most people that are being targeted here though wouldn't fall into that category.

> The worst it can happen is you have to pay exactly the labeled price some 3 months later.

What if you parked the money and it lost value as I described? I think that's a worse case. So this only works if you hold on to the money in a place where it's guaranteed to increase in value (but interest rates are low) in which case the only upside is to offset inflation but I don't see how that would make a significant difference. If you're a business, sure but not for an individual.

If you parked the money and it lost value, it doesn't matter, because that's only relative to everything other than the stand mixer you bought. The price of the stand mixer is fixed at the time of purchase, it doesn't go up as time goes by.

I don't get it. If you bought the mixer and paid for it a year later but a year later when you have to fork over the money and it's suddenly not 800 bucks anymore but, say 750, you need another 50 bucks. So you spent 850 instead of 800, no?

The amount of what you owe is fixed at the time of a 0% interest BNPL purchase, just like a real purchase. Even if the interest rate is not 0, it’s still fixed.

It’s not a margin account where you have to call it if the value dips too low over time.

What in such simple concept is so hard for you to understand?

BNPL suggests that it's better to take the 0 percent and pay off the 800 bucks, say, 2 years later and park the money somewhere accrueing interest.

All I'm saying is if you're getting a 0 percent loan for the mixer, interest rates on your savings are not going to be great either and returns on index funds are not going to consistently go up either. It's not unlikely that you end up with your 800 bucks turning to 750 after 2 years but you still have to spend 800 for the mixer after 2 years. 800 you put in at the beginning, 50 you have to chip in at the end, you just paid 850 for that mixer.

> What in such simple concept is so hard for you to understand?

Be better than that!

> 800 you put in at the beginning, 50 you have to chip in at the end, you just paid 850 for that mixer.

Honestly, if in 2 years you still haven't managed to save > $800 worth of your time with the stand mixer, you probably shouldn't focus on that $50 of depreciation.

Haha got it. I think we settled the debate :)

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