Buying in instalments, five questions to settle before you sign

Question one: what will you pay in total, and what is the cash price?

Before any talk of the monthly payment, ask for two figures: the price if you pay cash today, and the total you will have paid by the last instalment, including the down payment and any admin or file-opening fees.

A hypothetical example: a washing machine costs EGP 18,000 in cash. The instalment offer is EGP 2,000 down, then 24 payments of EGP 1,050.

The gap is more than half the price of the machine. Write it next to the product and ask yourself whether you would hand over an extra EGP 9,200 if the shop asked for it in cash on the day.

If the seller offers more than one term, work out the total for each term before you look at the monthly payment: any payment can be made small by stretching the term. Another hypothetical example: a phone at EGP 24,000 cash, three plans with no down payment and an EGP 500 admin fee on each:

The smallest payment is the largest total. Choosing by "how much a month?" usually means the third plan: EGP 10,700 above the price of the phone and three years of commitment. If you must buy in instalments, take the shortest term whose payment fits what is left of your month, not the longest term that makes the payment small.

Question two: where does the payment sit in your monthly budget?

Do not hold the payment up against your whole salary, because not all of it is free. Hold it against what is left after fixed costs, food and transport.

A hypothetical example: someone earns EGP 15,000. EGP 9,500 goes on rent, electricity, transport and school fees, and EGP 3,500 on food and household shopping. That leaves EGP 2,000 for clothes, small emergencies and occasions. A payment of EGP 1,050 takes more than half of that, every month, for two years. The real question is whether the payment fits in what is left after the essentials, with room for a month that goes wrong.

Question three: what are you already committed to?

A new payment never arrives alone. List everything you already pay out each month: appliance plans, the phone, a savings circle, repayments to a relative you borrowed from, a yearly fee you spread across the months. Add them up, then add the new one.

If the new total swallows what was left in question two, the problem is not this washing machine. Your existing commitments have left no room for it. Look at when each one ends, too: a plan that finishes in two months can make a short wait a sensible answer.

Question four: what happens if your income stops for two months?

The contract does not pause when your salary does. Read what it says about late payment. Is there a late fee? Can the lender demand the whole remainder at once? Is there a guarantor who would be asked to pay instead?

Then answer with numbers. If your income stopped for two months, could you cover two payments as well as the household's costs? Without an emergency reserve, a new fixed payment makes any bad month worse, because it adds a bill at exactly the moment money is short.

Question five: could you wait and save for it instead?

In the same example you already hold the EGP 2,000 down payment. Put EGP 1,050 aside each month instead of paying it to the shop, and the rest of the cash price, EGP 16,000, is there in about 16 months. You own the machine outright after 16 months, rather than finishing 24 payments two years from now.

Waiting does not suit everything. A fridge that dies in August cannot wait 16 months; that is what an emergency reserve or a cheaper stopgap is for. For a newer phone or nicer furniture, question five shows the real choice: two years of payments against a few months of patience.

Reading your answers

If the gap in question one is acceptable to you, the payment fits what is left with room to spare, your other commitments leave space for it, two hard months are covered, and waiting is not an option, then you are deciding with the numbers in view. If two or more answers came out badly, the answer is to wait. For the wider case against consumer instalments and the cash rule, read Lesson 3.3: The consumer instalment trap, and one rule that keeps you out of it.

Where Masareefy helps once you have signed

If you go ahead, record the plan in Masareefy as a repeating payment with its amount and due day, and set the number of payments. The app shows how many payments are left, how much you still owe and the expected date of the final payment. The month's payment is set aside from your safe-to-spend figure from the first day of the month, and a reminder arrives on the due date itself. The next time you face question three, every commitment is already in one place.