Taking the fear out of finance

A generation or two ago buying something on credit was seen as a little bit scary. Part of the fear was no doubt due to the significant interest rates that loans and other credit agreements tended to include. Fast forward 30 years and buying things on credit is a normal part of everyday life.

What is buying on finance?

Buying on finance could reasonably include hundreds of different purchases, including taking out a mortgage on a home and complicated car finance deals. But for the purposes of this blog, we are going to keep things simple and talk exclusively about point of sale (POS) finance.

POS finance is a type of short-term loan offered by some retailers. You typically buy a product with a small deposit upfront and pay the rest of the bill over several months. The value of this loan never actually lands in your bank account. Instead, a third-party finance company will pay it straight to the retailer. You then make your monthly repayments to the finance provider.

While they were previously only really available on home furnishings and durable consumer products like sofas and fridges, POS finance is now available on all sorts of products.

How does buying on credit work?

Traditionally, most POS finance providers would charge interest (like a credit card) on the loan, so you would end up paying more for the product than if you had bought it outright there and then. Not surprisingly, this puts off a lot of people. To address this, some retailers offer periods of ‘interest free credit’, where no interest is charged. So all the repayments you make go towards paying off the outstanding balance, rather than paying off interest.

At DivideBuy, we take this one step further and never charge interest to customers. You will only ever repay the overall cost of the purchase.

Make sure you’re clear on the agreement

As consumers, if we aren’t 100% sure what we’re getting ourselves into, then there is likely to be some underlying anxiety with borrowing. That’s why, once you’ve chosen us as your payment method on our retail partner’s site, we tell you exactly how much you’re borrowing, how long it’s for and how much it will cost.

Use a soft search for a risk-free credit check

Applying for credit can feel daunting, especially if you aren’t sure what your credit history looks like. Some people are put off applying for credit because they have heard that a credit check can negatively affect your credit score, making it harder to borrow in the future.

At DivideBuy, we offer a ‘soft search’ credit check that gives you a good indication of whether you would be accepted for credit, without leaving a footprint on your credit file.  If you then chose to take out the finance, your hard credit search would result in the same instant decision.

At DivideBuy, we’re committed to taking the fear out of finance for both consumers and retailers. Take a look at our retail partners today!

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