Not everybody can pay full price for gadgets worth thousands of dollars. Thankfully, these days online marketplaces like 11Street and Lazada come equipped installment plans. But how do they work? And will you be able to take advantage of them?
Let’s find out.
What You Need to Know Before Signing Up
Taking on any kind of installment plan is a medium-term commitment so I would recommend that you understand what you are getting into before you sign up for one. Let’s take a look at the basics:
- You will need to first have a credit card. If you don’t have a credit card, your options will be very limited. As I understand, no online marketplace currently offers installment plans without a credit card.
- The cost of the item will reduce your credit card’s available limit. Even though you will be on an installment plan where your obligation is to make monthly payments on the amount owed, your credit card will still authorize the charge as a full amount, thereby reducing your overall credit limit. For example: if your credit card limit is RM3,000 and you make a RM2,500 purchase on installment on January, your credit limit for that month will be reduced to RM500. As you make payments on the installment plan, your credit card limit will naturally increase over time.
- If you don’t manage to pay every month you will be charged interest. For most banks, if you don’t manage to make the monthly payments the charges will become part of your normal credit card charges and standard interest rates (18% p.a.) may apply.
Once you understand what you are getting into, let’s take a look at how you can use the installment plans:
How to Pay Using Installment Plans on 11Street
11Street is my preferred choice whenever I am thinking about opting for an installment plan. That’s because you get more payment options on 11Street than Lazada.
On Lazada, you get to choose between 6 and 12-month plans using only Maybank but on 11Street you get to choose between 6, 12, 24 and even 36-month plans using either Maybank (maximum 24months) or Public Bank.
That being said, let’s take a look at how you can get started.
Let’s say you want to buy this Huawei Mate 10 on 11Street:
Add to Cart, Checkout and you’ll end up on this page:
Click on the red ‘Order’ button and you’ll be directed to the info and payment page:
Select the ‘Easy Payment Plan(Interest-Free Installment) option. Next, choose the bank you want to use:
Finally, choose the tenure period you prefer:
After that, key in your credit card details and make payment.
Normally that is all you need to do. But as an extra step, I would always call the bank to make sure that the installment plan is in place. Some people have experienced some errors whereby the installment plan was not arranged automatically, so I’d recommend checking.
How to Pay Using Installment Plans on Lazada
Now let’s take a look at how you can use installment plans on Lazada. Let’s say you want to buy this Huawei P10 from Lazada:
Add to cart, check out and you’ll get to the payment page. On it, select the last option ‘Maybank Installments’ (yes, you can only use Maybank credit card for any installment plans on Lazada):
Next, choose your tenure period. You have the option of 6 and 12 months:
Next, key in your credit card details and then make payment. That’s it. Again, I’d err on the side of caution and call the bank just to make sure that the installment plan is in place, rather than assume that it will be.
Getting an Installment Plan from The Bank Yourself
Unfortunately, not everyone has a credit card from Maybank or Public Bank. That doesn’t mean you cannot make purchases using installment plans. It just means that you will have to do it manually.
All you have to do is make a call to your bank after you have made the purchase and ask for your purchase to be changed into a monthly payment plan. Most banks offer a 0% interest rate as well, but be sure to check on the minimum purchase price to qualify for installment plans. Different banks have different requirements:
Table from www.RinggitPlus.com
Make sure to check your bank’s requirements before making a purchase.
A Word of Warning: Low Monthly Payments Does Not Mean You Can Afford Everything
It can be tempting to keep buying things because the monthly fees are so low. This can be a trap. Putting things on installment can give you the illusion that you can afford things you really cannot.
I would only use this option if I don’t have enough money but urgently need to say get a laptop for school or work because my previous one broke. However, I would avoid getting installment plans just because I can and want to get the latest phone. This is a sure way to end up perpetually in debt.