Verivox warns against installment purchases on the Internet – installment loans are usually much cheaper
Comparison portal Verivox has compared installment purchase offers from major online retailers and advises against them. “When purchasing on credit from popular online retailers, interest costs are almost three times higher compared to installment loans that do not rely on retailers,” Verivox explained on Monday at the start of Black Week. Buying in installments from the mail order company Otto is very expensive.
Otto charges an impressive 18.92 percent interest on a shopping basket worth 2,500 euros and a term of three years, as Verivox also announced. A total interest charge of 729 euros is due. Financing costs at Amazon and MMS E-Commerce, which operates the online stores Mediamarkt and Saturn, would be much lower in the same scenario at 10.01 and 10.90 euros.
A classic installment loan for the same amount would be much cheaper at an average of 6.62 euros if taken through Verivox, explains the comparison portal. “Under these conditions, interest is only 255 euros for the financing sample examined.”
“Purchasing in installments is convenient because it is offered directly during the payment process. However, this convenience comes at a price,” explained Oliver Maier from Verivox. “If you want to satisfy consumers’ desires during Black Week, it’s best to compare conditions.”
Consumer advocates and banking regulator Bafin warned of rising excess debt due to installment purchases and so-called buy now pay later (BNPL) financing. Verivox emphasizes that classic bank loans with fixed payment plans and consistent installments offer further advantages. Anyone “paying off multiple BNPL financing or installment purchases at once can often easily lose track.”
AFP
