Finance on PCs - is it worth it?
Getting a shiny new PC for £30-£40 per month and paying it up over 2 to 3 years certainly sounds great.
That's just beer token money really and seems awfully tempting. Almost everything we look to buy now has its monthly cost pushed to us rather than the sticker price - whether it's mobile phones or cars, everything now is telling us what it costs per month.
We used to offer finance on PCs - it took some doing too, and not going to lie, it was expensive to us. The yearly costs to the Financial Conduct Authority to operate a consumer credit license and to the company administering the credit facility cost us nearly £800 per year, and that's on the basis that it wasn't even used.
Then on every sale, the default finance rate to customers would be 19% APR but this looked a bit heavy on the numbers, so we had the option of reducing the customers rate to 14.9% APR but the idea was that we would pay a contribution to the rates by means of a set up fee to bring the customers cost down to the more desirable 14.9% APR. This meant on most PCs we would have a subsidy to pay between £30 to £50.
Let's not beat about the bush, the computer market is not known for having generous margins - it's a cut-throat market with a savvy audience that often know how to shop around, and to a system builder that's a big hit to take on regular pricing, in some cases it might even eliminate any profit a sale entirely. Obviously at some point that cost is going to be added on somewhere. Of course, we all understand it's easy to inflate a cost a little just to make something later look more appealing - "Free Delivery" is the perfect example. It's not free, it's just been already added into the product price.
Okay, it's not as scandalous as some of the weekly payment options on white goods we've seen in the past (naming no names) but it's quite a hefty amount of extra cost to spend on an item, especially considering it's common to want to come back to an upgrade after a couple of years as well, potentially creating a continual debt cycle.
From our point of view too, finance applications had the added twist-of-the-knife that they didn't always get accepted - it's an embarassing situation for everyone when standing there and getting a big red cross with a rejection notice on the screen, and not ideal for us if we've spent a few hours finding the best PC system for a customer, looking over peripherals and so on and then all that time is wasted as the initial lure of these nice, easy monthly payments has just stopped everything flat in its tracks.
Not to mention, knowing that those who did pass the application alright, they could likely have got a much better rate if they looked at other finance options on credit cards or a bank loan, than they would be paying through the consumer credit route.
All these things added up mean that while we were offering finance on computers for a couple of years, at the start of 2019 we decided it was best for all just to drop this method. It's all fine and well trying to pitch the marketable 'low monthly cost' but when you realise everything else points at it being the wrong thing to do, there's no point pushing a method you don't believe in.
So how to make a PC more affordable?
Of course, we don't all have stacks of cash spare in the bank - some of us may be in the fortunate position to budget or save better than others, but the reality is that sometimes for whatever reason it's convenient to have something in your hands now without having all the readies available for it.
If you need a good PC and can't pay for it all right now, we'd strongly recommend checking these routes of potential free financing:
Now, used wrongly, credit cards can be a bit of a debt trap, but if you have the right one, and play by the rules, it can be a great way of either totally free or inexpensive financing. The credit crunch of the naughties has long passed, and with a reasonable credit score you should be able to get a card with a 0% introduction offer on new purchases, sometimes for as long as 2 years.
In terms of financial reward and effort, that can't be beaten.
But are you likely to be eligible? As with all credit, you need to be over 18 and need to have some history of responsible credit use already. If you've never had a credit card before, or you've had behaviour in credit that may be viewed badly, you can likely rule this route out. But if your history is reasonable, then you can use one of the many credit score sites that will show you the health of your credit file, but also show you card options that you're likely to be eligible for (Credit Karma and ClearScore are two for instance, but other options are available).
This is a 4 months interest free option available on purchases over £99 on any website that supports Paypal. So again, no extra costs here.
The credit limit you're offered when applying will vary on your usage history with Paypal and your credit history, typically users with a good reputation should be able to obtain a limit over £1000, but even a limit of £400-£600 is often available to those falling a little lower in the scores. It might not pay for all of your dream PC system, but it's a great way to bridge the cost.
That is, say you want a £1000 system and have £500 saved up already, and know you can comfortably spare £125 of your income every month to pay the rest off, it's a great way to spread that without any interest costs applying as long as (like a credit card) the monthly payments are made on time.
Even, if you already have £1000 in the bank but you would rather not be cleared out in case any unexpected bills come up, putting half of the cost on Paypal Virtual Credit means you're not living on beans until next pay day and gives assurance that there's still some cashflow available should anything unexpected happen.
Without doubt, check the above methods first. They're free and there's no better value than free.
Interest rates are the lowest they've been and while this potential saving is not always being passed to the customer, it's worth checking with your bank as there are instances of loans being available from as low as 3.0% in 2020. Even a 6% or 7% rate is of course a huge improvement over the typical amount on consumer credit.
Check your bank first as they'll already know you and may have preferential rates if you have a particular current account with them already.
Otherwise, sites like the credit score facilities (see Credit Card section above) may be able to show available unsecured loans too that you are likely to be eligible for.
Can't get any of the above?
If you're not able to secure one of the above methods, all is not lost!
Reconditioned systems
One method is simply start on a lower but more affordable rung if you need up and running sooner. For finstance, for gaming systems we always have some availability of reconditioned gaming PC systems (typically a mixture of ex-demo items or customer trade-ins mixed with some new hardware). They typically will have warranty of between 6 months to 1 year but give more performance for the money than a new system, so can be a great way to get on that PC gaming ladder a little sooner.
What's more, using our trade-up option that's available to existing customers, parts can be swapped up in time to improve performance later.
Add over time
If some features are luxury rather than neccesity, why not just add them later? For instance adding something like a secondary storage drive or extra RAM in a few months is an easy way to knock £100 off a system price at the start, and using our trade-up scheme you could improve graphics later. As always, tell us what you want to do and what you can afford and we'll suggest the best way to do it, which may include spacing out some features over time if it's not feasible to match up right away.
Saving Club
If the credit options above are not suitable for you and you're not a good saver, our saving club route (sometimes called a Christmas Club) may be a good way to progress and help motivate putting money away.
First off though, we're not a bank, and we can't really justify building a PC for you for it to sit and be paid up over 6 months. That as you can likely understand creates cashflow issues for our business if we start doing that a lot. We have bills to pay too!
And at the same time, we wouldn't want to just take payments from you without giving anything tangible in return, doesn't leave you much to show for it.
So our suggestion is that since a desktop PC is typically made up of 8 to 12 parts, our quotes give a breakdown of pricing of all of these items. So just buy a part (or two) as you can afford it.
Start with a case and power supply perhaps, then storage, then motherboard, RAM and get things like processor and graphics last. Either we can hand over these items to you as they're paid for and you bring them back in to us together when you're ready to have the system built, or, we keep them reserved for you at the shop as they're paid for and we'll proceed with the system build and test (typically 2 days) when all items are paid up.
We can mark off items from your sales quote as they're purchased so that you can see at any time which parts are still outstanding.
This can be a good method for instance for anyone needing a computer for Christmas that can't be sure of hanging to all the funds in one go or the above finance options are not available, and making a start on buying some parts is a good incentive to carry on and complete.
One thing that we do need to be upfront and remind about - we guarantee computer quote pricing for 7 days. There can be some movements in price in our market, and this is either from supply availability or simply the value of the £ currency versus the dollar. Sometimes products fall in price as a result and sometimes they go up in price. It's something to bear in mind that if purchasing a computer over a few months that the cost may vary from the initial quote, however this can just as easily go in your favour and can mean savings, but do bear in mind that if a product has increased in price it's really just unavoidable, again we can't just keep items stashed away for months and reserved at a previous price point. That said, big swings in cost don't happen too often, but it's just something we need to make clear.
Wrap Up
Hopefully this gives some clarity on methods that could help save you some cash or get a computer on your desk a little sooner. As always, if you have any questions about building a computer, pop us an email to sales@kustompcs.co.uk or to get a computer quote please complete the system quote form.
One of the points on the quote form is 'budget' so if you are relying on one of the above finance methods, it makes sense to complete your application for those first to know what's realistically affordable for you on a computer.
