How can I pay for a new appliance?
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Do you have cash on-hand to replace a major appliance such as a stove or washing machine if it were to break down? What if your television stops working? What can you do to replace these items if you do not have enough cash? There are a number of options; let’s take a look at some of them.
One possibility is to go without the item until you can save enough cash. For example, if you have a laundromat near your home, you could go there to wash your clothes until you can save enough to purchase a new washing machine. If a new washing machine is $500, you could save $50 per month for 10 months and have the cash to purchase a new one.
If the appliance that is broken is a non-essential item like a television, it is possible to substitute other activities for watching television such as reading, playing games, listening to music, etc. However other appliances, such as a refrigerator, are not so easy to do without. It might work out for a day or so, but you will need to replace your refrigerator very soon.
You can purchase the new appliance or television by using a credit card. One advanctage is that you can replace the appliance or television very quickly. The disadvantage is the interest you will pay on the item which can be substantial, particularly if you can only pay the minimum payment each month. If you do not have a credit card, it would not be wise to open a credit card only for this purpose.
Getting a small install loan from a credit union or a bank is another option for borrowing the money for a large purchase. Interest rates are usually lower than a credit card, so the total cost of purchasing the item over time will be less. The monthly payment will need to fit into your budget.
Purchasing from a rent-to-own store could be an option for some. The store will allow you to make small weekly or monthly payments. Usually these stores do not require a down payment. However, be aware that the items will cost you more in than long run than with a credit card or most other types of financing; possibly as much as four times as the cost of the item. According to Michigan State University Extension, it is important to approach this option with a great deal of caution and be sure to read the fine print.
Sometimes you can find a used appliance at a garage sale, from a relative or friend or other venue for used items. This may be a budget-friendly option; however, try the appliance or TV before purchasing to ensure it is in working condition. The used appliance may last for a long time, or you might find yourself needing to replace the item much sooner than you would have if you had bought it new. That is the chance you take when purchasing a used appliance from a private party.
Weigh all of your options carefully; consider the cash you have available now and each month when deciding whether to purchase on credit or to save to pay for things with cash. Take the time to make a good decision now so you won’t have to live with regrets later.
For more information on saving money and using credit, check out the MI Money Health website which has many resources on a variety of money-related topics. You can also sign up for weekly digests on personal finances topics at the MSU Extension website.
If you are wondering about your financial health, take a financial health survey from MI Money Health to get your financial health score! It is confidential and your answers never connect back to your name. This survey can help you evaluate your current financial situation, provide ideas on how you may improve your financial health and connect you to resources in your local community.
