Indianapolis—With a tough economy those "no interest" loans seem like a great deal, but if you're not careful some can cost you hundreds of dollars all at once.
If you bought a high ticket item like furniture, and your contract states no interest for a certain time read it thoroughly. Bill Thomas with the Better Business Bureau says it sounds like a great deal, but it can come back to bite you.
"What they'll do is establish a payment plan that's 24 months instead of 12 and the contracts for these types of purchases might include an interest payment that goes in full."
And that's not the only hang-up with "no interest" loans.
If you wait just ONE day past the due date for the last payment, you could owe the entire interest payment you were trying to avoid.
"If it's a $2,000 item, and there's a 15% interest charge if you don't pay for it within that 12 month window, you can be looking at an additional $300 month charge tacked onto your bill," explained Thomas
Don't forget, finance companies make their money off you not paying in time. Know your contract, read the fine print, it can help you save some money and really stretch your dollar.