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Dave Says: Don't Fall for "Same As Cash" Offers

Dave Ramsey - February 14, 2012

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We made a mistake with the length of our same-as-cash plan. Now we're paying 30 percent interest. What can we do?

Dear Dave,

My wife and I bought some furniture a while back on what we thought was a 24-months-same-as-cash plan. The original purchase price was $1,600. The other day, I got a call from a collector saying that it was actually a 12-month plan, and the balance is now $2,800. We looked at the contract, and it was our mistake on the length of the plan. Still, that makes the interest rate about 30 percent. Is there anything we can do about this?

Robert

Dear Robert,

This is one of the reasons I tell people to stay away from “same as cash” agreements. You may not have agreed to a specific percentage rate, and I’ll bet it’s something less when you factor in the time before and after the 12-month period ended. Still, I’m pretty sure that when you signed the contract you did agree to have this thing convert to a financed contract if you didn’t pay it off in 12 months. These kinds of deals are really scummy. Not only have they charged you interest since the 12-month period ended, they’ve also back-charged you interest for the entire length of the contract!

These same-as-cash contracts are a bear trap. They’re designed to mess you over big time. You can try to dispute it, but I’ve got a feeling you’ll lose and have to pay about $1,200 in stupid tax on this one.

Lots of people think they can pull one over on a company with the “same as cash” deal, but stuff almost always comes up—even if you don’t misread the contract. I’ve said it a million times, Robert. If you play with snakes, you will be bitten!

—Dave

For more financial help, please visit daveramsey.com.

Comments 3 comments

grobyn said...

09:29 AM
on Feb 14, 2012

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'Same as cash' is never really the same as cash. With real cash, you can easily negotiate the price on 'big ticket' items (and several small ones, too). If you can't pay cash for it now, what makes you think you can pay more money for it later? Monthly payments are slavery. I'd rather struggle for something first and then enjoy it ... NOT enjoy it once and pay for it long after the enjoyment has faded.

bgtaylor4 said...

10:33 AM
on Feb 14, 2012

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Agree with grobyn and Dave in terms of not buying what you cannot afford (save those transactions for the home most cannot afford outright and need to use, and emergencies that are NEEDS). However, what is fun with these offers is to have the funds, place them in a liquid special savings account specifically to pay for the item(s) and meet the terms of pay-off (with new laws that means monthly payments). That is, whenever we buy big ticket items we finance them 12, 18 or 24 months, earn the interest on the money, and make the final payment on time. Obviously if you can get a significantly better price by paying cash up front, then do it. And last, there isn't a piece of furniture in the world worth paying above MSRP (with interest)... sit or sleep on the floor, eat off a board on top of boxes, buy "slightly used" or get something to sleep, sit or eat off free on Craig's List, set out on a neighbor's curb or cheap (in your budget) at the thrift store.

bgtaylor4 said...

10:37 AM
on Feb 14, 2012

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Reads funny... debt/interest for bona fide EMERGENCY NEEDS (furnace, water heater, fridge) and for a house itself. Not a car, and certainly not for furniture.
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