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The Complete Breakdown of Computer Financing

Did you know that 84.2 million computer units got shipped worldwide in the third quarter of 2021 alone? The continued school- and work-from-home orders, in turn, were key drivers of that growth. As such, experts say that the fourth quarter will likely see a similar number of shipments.

The thing is, not everyone who needs a PC or laptop for school or work can afford to pay for one in one go.

If you're in the same boat, you might want to consider applying for computer financing. That way, you can get your hands on a new device without paying anything right away.

To that end, we came up with this guide discussing financing programs for computers. Read on to discover what it means to finance and where and how to get it.

What Is Computer Financing?

Computer financing allows consumers to buy the device they need now and then pay for it later. What's more, it lets you pay for your purchase over time.

However, they differ from computer or laptop loans, which take the form of cash.

A computer loan entails borrowing actual cash from a lender. You then use the money you receive from the lender to pay the device's total cost upfront. From there, you pay the lender back in increments or installments as per your loan contract.

On the other hand, financing a computer doesn't give you direct access to cash. Instead, the financing company covers the cost of the equipment first. That way, you can take home the desktop PC or laptop without even paying any money.

As with a loan, though, you need to pay back the financing company on an installment basis. Depending on the contract you agreed on, you may have to make monthly payments for six to 24 months.

Which Computer Brands and Stores Have Financing Offers?

Many computer makers, such as Apple, Dell, HP, Lenovo, and Samsung, offer such programs. The same goes for some retailers, including Amazon, Target, and Walmart. All offer 12-month financing options to qualified buyers.

Why Consider Financing a PC or Laptop?

A recent survey found that only 39% of people in the US can shell out the cash for an unexpected $1,000 expense. By contrast, the rest would need to borrow money, rely on a credit card, or apply for a personal loan.

The thing is, you might end up facing such a sudden expense if your current computer breaks down. Apple's most affordable laptops, for instance, start at $999. Other brands, such as Lenovo, Dell, or HP, have cheaper offers, but their better models also cost around $800 to $1,000.

So, if you don't have that kind of cash, you may have a hard time buying a laptop at its sticker price. However, if it's a must for school or work, then you can't just put off buying one.

In that case, you might want to try applying for laptop financing. That way, if you qualify, you can get the device you need now without shelling any money yet.

Plus, many deals and sales on laptops and desktop PCs are eligible for financing. So, not only can you get a brand-new computer for less, but you also get to pay for your new device at a later date.

What Are the Financing Fees Involved?

Many financing companies charge interest, the rate of which depends on your creditworthiness. Your creditworthiness, in turn, has to do with your credit score and history. The higher your credit score and the cleaner your record is, the lower the interest rate you can expect to get.

However, you can avoid paying interest if you go for a 0% APR (annual percentage rate) financing offer. These are promotions usually offered for financed purchases with terms of 6 or 12 months. With this, you only have to pay the sticker price, so long as you make your monthly installments on time and in full.

For example, let's say you finance a laptop worth $1,000 on a 12-month term. With a 0% APR offer, your monthly payment should only amount to $83.33 ($1,000 divided by 12 months). You then have to pay that $83.33 every month for 12 months.

However, you may get charged an interest fee if you fail to pay even one of the 12 installments on time. So, make sure that you pay your dues on time to avoid making your computer purchase costlier.

Why Not a Personal Loan Then?

You can always opt for a loan, but in doing so, it might take longer before you can get your hands on a new computer. That's because you need to find and apply with a lender first. Moreover, it may take you a few days to gather the paperwork required by personal loan lenders.

Then, you need to wait for the application to get approved, which can take up to five days through a bank or a credit union. Then, if you agree to the term's contract, it may take another day or two before the funds get disbursed. It's only after that wherein you can finally purchase the desktop PC or laptop you need.

Moreover, not all personal loan applicants automatically get approved. For instance, in 2020, lenders denied extending credit to about one in five US consumers.

On the other hand, the advantage of personal loans is that you can borrow more than the cost of the computer you want. That may be helpful if you have other bills to pay for and don't have the cash yet.

In addition, a personal loan can help you finance a laptop with bad credit. However, do note that such loans often come with higher interest rates.

What About Credit Cards?

Aside from financing or a personal loan, you can also use a credit card to finance a computer purchase. As such, it's best to check out this alternative, especially if the other offers you get have high APRs.

In the US, credit cards have an average APR of 20.46%. However, consumer cash-back rewards cards have a lower average APR of 19.31%. Both are high, but the good news is that some credit card issuers have promotional 0% APR offers.

Credit card companies often offer those 0% APR programs for making installment payments. In most cases, you can use them to finance large purchases, such as a computer.

When you take advantage of such an offer, the total price of the device will get deducted from your credit limit. So, suppose you have an available credit limit of $2,000, and the laptop you finance is worth $1,200. As soon as the transaction is complete, your credit limit will go down to $800 ($2,000 - $1,200).

However, your card issuer will break down the payments into several months, such as 6 or 12 months. So, suppose you go with 12 months, then your monthly payments will amount to $100. You'll then make $100 payments each month for the next 12 months.

So long as you make those required monthly payments on time, you won't have to pay any interest.

However, failure to make even one of those payments on time will lead to an interest charge. What's more, you may ultimately lose the installment offer on your computer purchase. In that case, you'd see the remaining balance charged to your next bill.

How Do You Apply for Financing?

In most cases, you first need to create an account with the financing company. For example, if you apply with Dell or Lenovo, you need to be one of their online store's members. Once you've logged in to your account, you can check if you pre-qualify for a financing offer.

In the US, the general requirements to apply for financing include the following:

  • Be 18 years or older

  • Be a US resident

  • Proof of US residency (current US address)

  • A valid social security number

  • Email address

You can then choose the financing method to pay for your computer purchase if you qualify. Upon check-out, you will receive one or more financing offers, including the term you want. Aside from the typical 12 months, you may also get options for 6-month, 24-month, or even 36-month periods.

Bring Home That Brand New Computer Today

As you can see, computer financing is a great way to buy a PC or laptop now and pay for it later in multiple, small amounts. However, unless you get a 0% APR offer, it can make your purchase costlier. Failure to meet the program's payment terms and conditions will result in the same thing.

So, to avoid all that, be sure to make your monthly installment payments on time, all the time. Better yet, if you have the dough, pony it up in one go.

Are you looking for even more ways to save on your tech gear? We've got more hacks to share with you, so feel free to browse our other blog categories!