CARTOONS BY CHRIS BRITT

• In-store credit. This allows you to get extended payment terms on a major purchase.
For example, you can get building materials at Home Depot for 24 months interestfree
when you spend a certain amount there. Just be sure that you pay the balance in
full before the terms end to avoid sky-high interest costs on the back end. These lines
of credit are easy to apply for at many box stores.
ADVANTAGES
Lessened credit criteria. Your credit is not a major concern for vendor financing. The
loan is based on performance. Basically, all credit standings are accepted. When you are
just starting out, you can use the repayment of these loans to start or continue building
your credit.
Promotions, discounts and other perks. You can take advantage of discounts and up to
24 months with no interest on certain purchases. This can be a low cost option for getting
financing, but make sure you read the fine print before you sign on the dotted line so you
know exactly what you’re getting into.
Fast approval. You can get approved in as little as two business days with your funds
available within five to 10 business days.
DISADVANTAGES
High interest rates. Store credit cards can have up to 26% interest if you don’t meet the
terms. Most people get hooked on the low introductory rate only to hit the wall on the
back side when they don’t pay it off on time and owe the balance plus all accrued interest.
Fine print. Keep an eye on the due dates and be early in paying off the loan. Don’t take it
down to the wire.
VENDOR FINANCING EXAMPLE
Doug owns a large business and needs to purchase inventory from a major supplier
that tops out at $1 million. He only has $100,000 in cash on hand. The vendor offers
to lend him $900,000 at 6% interest to make the rest of the purchase. To back the loan,
they want collateral, such as his current inventory or a claim on Doug’s cash accounts to
ensure payment.
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