On the Christmas Day 25th Dec. 2006, I went to shop for a new Sony Ericsson K800i at Bukit Jambul Complex. K800i is a very new model with the best camera built-in. From the offer brochure of Alliance Bank credit card, the price is RM156/month for 12 month installment. Total amount paid will be RM1872.
I am trying to survey the retail market about the price. First shop I visited offer RM1500 with 512MB memory upgrade. No extra charges if paid using credit card.
The second shop offer RM1460 for the exact model. Since it has so much difference in price if compared to the offer of RM156/month 0% interest installment, I had decided to buy it at the shop. Of course the phone offered is AP phone. The problem is that I don’t have so much cash at hand. I went to the ATM machine at basement floor. Oh! The limit of withdrawal is RM1000 only per day. Seems like I have no other choice but to pay using credit card. When I got back to the shop, I saw a sign of offering installment plan if I use HSBC bank Credit Card to pay. The sales executive informed me this:
2.5% extra charges for credit card payment. Add another 5.5% for 12 months installment, or add another 2.5% for 6 months installment. So I used my financial calculator and do some calculation of time value of money (TVM)
6 months installment, extra charges is 2.5%+2.5% = 5%
The installment will be RM1460 x 1.05/6 = RM255.50/month
PV=1460, N=6, FV=0, PMT= -255.50
calculate i (Effective Annual Rate) = 23.93%
12 months installment, extra charges is 2.5%+5.5% = 8%
The installment will be RM1460 x 1.08/12 = RM131.40/month
PV=1460, N=12, FV=0, PMT= -131.40
calculate i (Effective Annual Rate) = 17.18%
Looks like taking up the 12 months installment is a better choice. However, 17.18% rate of interest is pretty high. I might as well get the cash to buy it on another day. But it is a Christmas present and I don’t have much time left. When I had made up my mind, the sales person couldn’t offer the bronze colour that I like. They only have it at the branch at Prangin Mall. I was not going to pay them at Bukit Jambul Complex and then go pick up the phone at downtown! That’s ridiculous.
So I went on to buy the phone with the colour I like at the 3rd shop. The price is RM1420+ 2% using credit card. So the final price = RM1420 x 1.02 = RM1448.40. My payment of credit card is only due on early February.
I wonder what is the price I can get if I keep on shopping at the 4th shop? or perhaps cheaper at the 5th …