The long-term installment trap and the price we have to pay.

"Easy to relax, easy to relax, no down payment, no waiting to collect money, start to relax long, chill!!!"

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In the days when almost any product can make an installment, and the current installment seems to prolong the amount of time for consumers to make an installment for as long as possible.

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For example, a big piece that everyone should be familiar with, both house and car. In the old days, we were used to that a house can usually installment for up to 30 years (360 installments), and cars can installment for up to 5 years (60 installments). But you know, nowadays in many carriers, houses can installment for up to 40 years (480 installments), and cars can installment for up to 8 years (84 installments).

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At present, to meet the needs of consumers more quickly, providers of goods, not just houses and cars, are trying to prolong the period of installment to make the "monthly installment" of goods and services cheaper, even slightly.

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The shocking thing is, for some products like electronic devices or mobile phones that everyone already knows are deteriorating in value every year, some operators can now give us installments for up to 4 years.

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Honestly, if we look at it with common sense, I think there is no reason for us to relax an IT device or a mobile phone for three to four years.

After the fourth year, everyone will know that the value of these IT devices will definitely fall to no less than 50-60%. Apart from the value of the goods that disappear quickly, the "interest" that we have to pay all the way.

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The point is, in addition to the cost of money that we have to pay off, the "time cost" that we have to pay off for me, I think is equally important.

So to give everyone a clearer picture of what the cost of interest and the amount of time we have to pay, let's calculate the numbers.

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48 long mobile installments??

Surprisingly, the mobile size, which we usually only pay for 10 months, has a promotion that allows us to pay for 48 months. The problem is that this long installment, the carrier does not allow us to pay free installments without interest, of course, right?

Usually you charge an interest of 0.39% - 0.99% (promotion depends on the period). Let's calculate it.

- Mobile price (principal): 40,000 Baht

- Relaxation period: 48 months

- Interest: 0.99% per month (Static / Flat Rate)

If we use this condition, we can only pay 40,000 baht a month, 1,229.33 baht a month. It sounds comfortable, right? It only pays 1200 baht. People with a salary of 20,000 can have a top mobile phone.

But it's even more cruel if we try to unpack the numbers.

1. Interest payable "per month"

- 40,000 x 0.99% = 396 baht / month. It seems like a little, right? It's only over 300 baht a month, but it's not over yet. Think about item 2.

2. Total interest throughout the contract (48 months)

- 396 baht x 48 months = 19,008 baht (50% of mobile price)

3. The net price you actually have to pay.

- Principal 40,000 + Interest 19,008 = 59,008 Baht

The conclusion is that from 40 thousand mobile phones to almost 60 thousand! almost 50% more expensive. You see, the focus, but what to do, the monthly installment is minimal.

To own something faster, easier, there are costs that we have to pay, and there are a lot of costs.

This is a real example that I've calculated so that everyone can see how much interest we have to pay. This case may look a lot, but I want to show you another case, a 40-year home installment.

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Home installment 40 years 🏠

Let's say we buy a house for $3 million, between choosing a 40-year installment and a 20-year short installment, how many different numbers are (let's say the average interest over the life of the contract is 6%).

- 20 years home installment (240 installments)

- Annuities: 21,500 Baht / month

- Total installment: 5,160,000 baht

- Interest only: 2,160,000 Baht

You might be shocked to see that the house costs 3 million, but we have to pay interest, including 2 million, before we panic to see the 40-year installment.

- Home installment for 40 years (480 installments)

- Annuities: 16,500 Baht / month

- Total installment: 7,920,000 baht

- Only interest: 4,920,000 Baht

If we choose a 40-year installment, take only the blossom to pay, the interest is almost twice as expensive as the house price.

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And if you can't short, what to do?

But of course, many people will say that they do not really want to pay long installments, but to do so because it helps to reduce the amount of installments per month. If it is short, it has to pay more annuities per month. This can not be bought.

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The intention is that I write this article because I would like to invite everyone to look further. In fact, the convenience of paying a small sum of money and time, the cost of which is money and time, every month, every year that we have to lose. For me, it's not worth paying for that kind of short-lived happiness.

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Of course, I'm not saying that the installment is wrong, it's all possible. Everyone can use the installment service, but we don't get caught in the trap of instalments that are longer than necessary, for the sake of slightly cheaper annuities that cost us more money and more time in the long run.

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Today, we live in an age where everything is encouraging, accelerating us to spend as much as possible, as much as possible and as quickly as possible, so it's not strange for us to see these services come out and I believe that in the future, there will be services that will facilitate us to buy more things.

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It's important to be conscious, we don't get lost in the ease and ease of forgetting that everything "always has a price to pay," to be patient with saving money first and then buying it, or putting down some money and then buying it, I think is the best way to buy something.

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Because finally, don't forget, no matter what you pay, what you pay is not only interest, but time and freedom, which you have to exchange.

Before you pay, before you buy anything, think carefully, plan carefully.

"Can't buy... still don't have to buy."

This is as simple as........

WIN.ITTISAK

# guruliving