Big purchases require a lot of thought for common middle class people. They do not have the liberty to spend all of their savings at once on a sofa set. That would just not make sense as there are a lot of essential things that those savings need to be spent on. This is why financing schemes appeal to the psychological mindset of the people. Taking for example , financing for furniture. If you see a sofa set that costs about forty five thousand rupees and you really like it but cannot be spending all of that money at once. So you would prefer giving five thousand per month for the next few months or even two thousand a month for a couple of years rather than giving up Forty Five thousand rupees all at once.
Psyche targeted
This is exactly how financing for furniture gets in your head, it sounds like a better option comparatively to paying the upfront amount. It may even be the better option for you but what does not get openly talked about is the time period and interest rate that gets charged on a monthly basis. This happens when the deal is finalized and the seller now focuses on your monthly payments, he gets to the full amount when he gets there. There is a certain interest rate that is charged every time to submit an instalment that does not necessarily remain the same percentage. In fact if the contract does not particularly state the amount of interest charged then the seller is at the liberty to decide. The borrower in this case is left with no choice but to pay them on a monthly basis. In the name of customizability they would adjust your time period of repayment. This is in a way the dark side of financing that does not get talked about. The seller through these means is able to make a profit for him/herself. Now if we come to think about it , how beneficial is financing as a repayment scheme anyway?