You may notice that many music stores and businesses now provide financing for their purchases. Many individuals have asked if this is a good idea. Should you take out a loan to purchase an instrument? Yes and no. Financing has both positive and negative aspects.
So we thought we’d go through everything so you can make a more informed decision about whether or not to finance your new guitar.
Please keep in mind that we are not financial advisors; we are only sharing our own experiences and what we have learned and discovered due to them. If you require professional guidance, please contact a legal expert. So, without further ado, let’s get started.
It’s not all bad news, though; some fantastic benefits to financing guitars make it a no-brainer.
The most significant benefit is that your ideal guitar may become far more affordable. When you divide that £3000 Gibson into monthly installments, it becomes more accessible. Why shouldn’t you finance the purchase of a Les Paul Custom shop if you never intend to sell or get rid of it?
Why not free up the bank account and financing and not have the complete sum come out of your bank account at once if you plan to keep it forever?
Last but not least, according to PaydayNow, once you’ve paid off the debt, the guitar may be worth more. If it’s a collectible Gibson or Fender, there’s a chance it’ll appreciate. As a result, the finance payments will be reduced. Most custom guitar shops provide financing with low or no down payment. Making getting a custom-built guitar even easier and less expensive.
Something to Keep in Mind:
Many businesses will offer 0% financing, which means you won’t have to pay anything to borrow the money. So you merely take out a loan to cover the cost of the instrument. This is a no-brainer because you’re simply spreading the instrument’s cost across 12, 24, or 36 months which is ideal. Plus, as previously noted, if the guitar is uncommon or limited, you will have paid it off by the time you have completed paying it off. It may be worth a lot more. Putting money into a good cause. You will, however, need to perform some research before making a purchase.
They aren’t harmful in and of themselves, but they are something to think about when taking out a loan. The most important thing to remember is that you are borrowing money. You’re taking out a loan.
This implies it will appear on your credit report. This isn’t necessarily “bad,” but if you’re looking for a loan or a mortgage, it will appear on your record that you “owe money,” which could effect the amount of your load or the outcome. This varies based on your income, salary, and expenses, but it is important to consider.
The next thing to keep in mind is that, because of how loan companies generate money, you may pay more for your guitar than you intended. This is due to a phenomenon known as “APR” (Annual Percentage Rate). This number represents how much you will be charged to borrow money; it is more intricate than that, but for this article, we will refer to it as the cost of borrowing money. As a general guideline, you want to keep this number as low as feasible. You won’t be able to secure 0% financing, but we’ll get to that later.
Another thing to keep in mind is that if the apr is greater than 0, you will pay more for the instrument than it is worth. For example, if you bought a guitar for £1000 and financed it with a 15 percent APR loan over a year, you’d pay roughly £1078. This indicates you spent more for the guitar than it was worth when it was on the market.
So bear this in mind and compare interest rates and term lengths. Using the example above, if you repay £1,153 over two years, you will pay £1,153 back. There are many fantastic deals, but there are also many disastrous deals. Look for a loan with a short-term and a low rate of interest.
The repayments are the next issue to discuss; you will have x amount to pay each month for y number of years. Failure to pay a payment will affect your credit score, and you may be forced to return the guitar to repay the loan. I appreciate that this all seems terrifying, but you should be alright as long as you stick to your budget. Don’t push yourself too far.
So, what do we recommend if you want to buy a guitar? Well, it all hinges on two factors: can you afford the repayments and what is the annual percentage rate (APR). It’s all about the numbers in finance. You’ll notice that different stores and retailers offer you different pricing and varying rates and periods. Because finance is such a competitive business, you can also compete with other shops for better prices.
We can’t tell you how to spend your money, but we can advise you to be prudent and avoid making hasty decisions. Finance is a fantastic option to purchase the guitar of your dreams with modest monthly payments. It is, however, a way to overpay for a depreciating instrument.
So make an informed decision. Whatever you decide, think about your options, shop around for bargains, and be sure you can afford it! This is the most crucial factor.