What Are Consoles On Finance?
Finance allows you to pay for an item over an agreed period of time based on a credit agreement that keeps both parties safe and informed. Typically, this will spread the cost of an item over a period of anywhere between 3 and 48 months, for anything from clothes to cars.
Game console finance works in the exact same way in which the retailer will allow a customer to pay them a set amount each month until the product is paid for, plus the interest incurred on the cost over the repayment period, usually set at 24.9% APR (Annual Percentage Rate) but can technically be set at any amount or completely free at 0%.
Technically anybody can get a games console on finance. Still, each retailer and lender will have their own criteria that usually rely on your personal credit score which essentially judges how good you are at managing your money and helps lenders decide whether you're too much of a risk to lend to, but some are more relaxed than others.
You can check what your credit score and report look like by visiting any of the popular credit reference agencies like Experian and Equifax.
How Do Consoles On Finance Work?
Finance on consoles are pretty straightforward and are done entirely online. Once you've picked a console you want to purchase, find out which retailers offer finance for the product. For example, the new PlayStation 5 could be financed through appliance stores like Curry's and toy stores like Smyths.
Once you've located a retailer, find out how you apply for finance with them, nine times out of 10 you will proceed through the sale as you usually would and when you reach the payment method section of the order you would select financing or similar.
From here, you'll provide personal details and some information regarding your ability to afford the monthly payments for the console.
The retailer will usually use a 3rd party lender for their financing, and this lender will use the information provided along with your credit report to make an instant decision about whether to offer your financing or not on the product.
If you are accepted, the payment schedule will be displayed showing what you pay each month, on what date and when the first and last payments will be taken. The overall amount will be divided by the period length chosen to work out these payments.
Benefits of Consoles on Finance
Finance is becoming a much more viable option for large purchases that otherwise would require a large cash purchase. In the age of shock reveals and exclusive 'drops', it's tough to anticipate when to start saving for upcoming products and especially sought-after things like games consoles that sell out in a matter of hours.
Here's a breakdown of the benefits of buying a game console of finance.
Cost
An obvious benefit is only having to pay the first payment or sometimes nothing at all to secure a new console. Then the ability to pay monthly makes it far easier to manage and maintain than trying to financially recover after spending £400 in a single day. We all work out our income versus our salary to know how much surplus money we have each month making another £25 bill far easier to work with than losing a large chunk of cash in an instant.
Security
If you buy a games console on finance, you'll have the retailer or manufacturer to turn to if you have any issues with the console, something which you may not have if your purchase a used or second-hand item. This gives you somewhat of a safety net against any potential problems and clear proof of purchase.
Finance Deals
Some lenders and retailers will run promotions on certain products when purchased on finance. For example, Klarna is spreading the cost of brand-new XBOX Series X & S across two years with 0% APR, meaning you'll pay no more than you would have to buy it without finance.
Many lenders will offer 0% for the initial months of a credit agreement or sometimes, like Klarna, throughout the whole agreement.
Flexibility
We all manage our finances in different ways, and we all receive our income in our own ways too. As standard, people tend to receive their salary monthly. Still, some people may be paid weekly or fortnightly, and some who is self-employed may receive smaller amounts of money daily, so it's not always easy to have a lot of cash available at one time.
With financing, you can set a day of the month that you wish to pay your monthly instalments that work within your finances, offering much more flexibility than paying upfront for the console.
Disadvantages of Consoles on Finance
While there are many benefits of financing a games console, there are a few potential drawbacks that are worth noting just in case they apply to you. Here they are:
Future Credit Impacts
In the event that you can't maintain the payments for your games console, and begin to miss payments, this will have a detrimental effect on your credit score, making it hard to secure other finance for different items.
If your missed payments and amounts aren't resolved, it can later lead to County Court Judgements (CCJ's) which will see a court order you to pay the amount due and if you don't, you will struggle to finance anything at all.
Interest
If you purchase things on finance regularly, especially too often, you'll be paying well over RRP for your items. Utilising these options on occasion won't harm your finances but taking too many things out on credit at once will lead to substantial monthly payment amounts and is probably a poor use of your money.
Who Offers Consoles on Finance?
Finance can be found from several different types of retailers, both online and high street. It's essential to understand the various ways in which finance is offered depending on where you look. Firstly, there are stores that specialise in financed goods in which they directly arrange the finance.
Whereas more traditional stores that now offer finance actually don't provide the finance themselves. For example, you can purchase items on finance at the popular store, Curry's, and you will apply on their website; however, the actual credit is provided by a company called Creation Consumer Finance, of which Curry's act as the broker, not the lender.
There are many companies that specialise in providing other stores with the option to offer their customers finance without taking any of the risks or work themselves. If you ever fell behind or stopped paying for your goods, the credit company would pursue the debt, not the store.
While it's not offered in every store, finance is becoming more popular with the rise of demand and it won't be long before you can finance items on a store even without them advertising it.
Can I Purchase a Console on Finance with Bad Credit?
Once you fall into bad credit with a poor record of repayment or a low credit score, it can be extremely difficult to attain credit with companies for things like games consoles; however, it isn't impossible. Some credit agencies specialise in providing credit for those people with less than perfect credit reports and scores.
They do this by increasing the APR in return for them taking the risk on someone that has proven to be a credit risk. While it's not ideal, pursuing credit with these types of agencies can actually help build your credit score if you can keep up with payments.
Although it may be worth asking whether you can afford to pay for a game console each month with existing credit problems, that is a decision for yourself.
If you're struggling with your credit score or file, and you need help in clearing your debts to get you back on track and therefore eligible for financing and credit, speak to a debt management company for free advice.
There are government-backed schemes that offer free advice and services that get you back on track along with companies like StepChange that have award-winning programs that help people get out of debt and back on top of their finances.
Once you fall into bad credit with a poor record of repayment or a low credit score, it can be extremely difficult to attain credit with companies for things like games consoles; however, it isn't impossible.
Some credit agencies specialise in providing credit for those people with less than perfect credit reports and scores. They do this by increasing the APR in return for them taking the risk on someone that has proven to be a credit risk.
While it's not ideal, pursuing credit with these types of agencies can actually help build your credit score if you can keep up with payments. Although it may be worth asking whether you can afford to pay for a game console each month with existing credit problems, that is a decision for yourself.
If you're struggling with your credit score or file, and you need help in clearing your debts to get you back on track and therefore eligible for financing and credit, speak to a debt management company for free advice.
There are government-backed schemes that offer free advice and services that get you back on track along with companies like StepChange that have award-winning programs that help people get out of debt and back on top of their finances.
Considerations Before Purchasing a Console on Finance
It would be best if you considered a few things before purchasing a games console on finance to ensure that it's the right thing to do for your personal circumstances.
Financial Situation
Consider your financial situation at the moment, if you're already a little stretched with money, another monthly bill, no matter how small, won't be a very welcome addition. If you're worried that your job may not be as secure as you would like, or you're going to have another child in the near future, you may be glad you opted against another monthly bill.
Depreciation
Think about how quickly games consoles depreciate, for example, the Nintendo Switch could be bought new for £100 less than its release price after just six months. If you were to be patient and wait for a deal to come up to secure the console at a lower price, could you avoid a lengthy credit agreement?
Good Finance Deals
If you're settled on getting a new game console on finance, don't jump at the first place you come across, instead, have a shop around and try to find a better finance deal or a better deal on the console. A lot of places will bundle the console with games to make it far better value for money.
Games consoles are wonderful avenues for escapism for all ages, whether it's playing online with your friends or winding down after a tough week at work with a magnificent adventure game, but these amazing machines aren't free.
Financing has allowed people to own things they couldn't afford any other way, which is a fantastic thing to see, but only if it's financially right for that person. Too many people get attracted by the premise of monthly payments so low that you'll hardly notice them, but that can lead to big issues down the line.
FAQs
Q: What finance options are available for game consoles?
A: There are several different finance deals ranging from Buy Now Pay Later in which you delay full payment for a number of months defined by the agreement, to pay monthly deals. Take a look at any electrical or games store to see what they have on offer.
Q: Can I get a Nintendo Switch on finance?
A: You can get a Nintendo Switch on finance from many places, including PayPal who have recently introduced a new financing system directly through their app.
Q: Can you get new consoles on finance?
A: Yes, both the new XBOX Series X & S and PlayStation 5 consoles have been available to pre-order through a financing option.
Q: Can you finance game console games and accessories too?
A: You can finance pretty much anything available on a website that specifies it has a financing option. Sometimes the criteria require that you spend a certain amount before being eligible for financing, but that changes from store to store.
Q: What happens if I don't pay?
A: Failing to keep up with your financing payments can cause significant problems further down the line. This will start in the form of letters and phone calls, leading to marks on your credit file, bailiff visits, County Court Judgements and ultimately, the potential for the repossession of goods to satisfy the debt.
Therefore, it is essential to keep up with your payments and to only take financing options when you are in the best state to do so.
