Interest Free Instalment Payments


Last weekend I bought a 2nd hand fridge. Its only 6mths old and has 4yrs warrantee left. Retails for about $1500. The owner had moved into a nice new house and the appliances were all brushed metal finished, so his new white fridge didnt match.

I call him and said I would be interested in buying it, and I described my terms. I said if you get any better offers before the weekend, that's ok, if not I'll take it for sure (I really thought someone else would have bought it by then).

Anyway, I get a call later in the week from the owner asking what time I was picking it up (surprise!).

Apart from the price, I thought the terms I asked for might be appropriate for this particular forum (see below):


Purchase Agreement: Date – dd/mm/yyyy

With: [purchaser] – [phone]
ID: Driver’s License xxxxxx

With: [vendor] – [phone]

RE: Westinghouse 2 door Fan Forced, Frost Free
refridgerator/freezer with 450 liter capacity.
Model: RJ452T-R “Freestyle”.

I agree to purchase your fridge on these conditions:

1. Price: $900

2. Deposit payable: $300

3. The fridge is to be removed from your place when it is convient for both parties.

4. [purchaser] to pay for all the moving costs.

5. $300 cash is to be paid to [vendor] on the day of moving or prior.

6. The balance of $600 shall be cleared within 4 months by means of 3 monthly instalments on the following dates;
a. 1st instalment - $200 - 15/10/2002
b. 2nd instalment - $200 - 15/11/2002
c. 3rd instalment - $200 - 15/12/2002

7. The outstanding balance is payable anytime prior to 15/12/2002.

8. [purchaser] will provide a 1992 Nissan Pulsar (Registration number: xxx-xxx) as the security against the purchase. The current insured value of the car is $x,xxx. Should [purchaser] default on the purchase, the car will be sold to repay the outstanding amount. This car has no other finance secured against it.

9. Payment to [vendor] made be made by way of direct deposit to the following bank account;

Account Number:

[purchaser] [vendor]

Sign: Sign:

(by the way the same type of agreement has been used to purchase a gas heater and piano from private buyers)
Jeez Michael,

That's kind putting up the car as security....but what if you sell the car and fridge the day after picking it up, flag the rest of the payments and catch the first flight to Majorca to mourn the death of an old mate!!

Kidding of course, but there just seems to be too much at stake for the vendor.

But the point is the vendor took it.

We dont' try to work out why a vendor shouldn't take a deal. Nor why we wouldn't take a deal. Rather focus on finding a deal.

Michael tends to go flat out with these creative offers. Gives him an edge, toughens his skin (and occassionally ticks me right off :D

In this case it worked like a charm.
Just to add a point to Michael's post for those who think vendor is disadvantaged.

The gas heater we bought has only been used for 1 winter but it's 6 years old, ie it's been sitting there collecting dust for the past 5 years! and it's a rather big has heater, it did take up a lot of space so the owner was very keen to sell it. ------> don't wanter? I think so. (btw, he is my co-worker too) :p

The piano we bought. The owner is a music teacher, who has just recently upgraded her studio so she just wanted to get rid of the old one. The piano had already been sitting in her kitchen for 3 weeks, when we saw the ad in the Trading Post. -----> definitely a don't wanter! Since the price was quite reasonable, we didn't negotiate the price only the terms.

The fridge. Michael has already told you the story. The colour of the fridge doesn't match the other furniture in the kitchen. Need to get rid of it asap for aesthetic reason! :)
(otherwise, I believe his wife would be nagging him everyday until he sold it.) ----> potential don't wanter. :)

We want to be fair to the sellers, so we didn't negotiate hard on the prices. And if you read the conditions, we did put down some deposit. Say after 2 payments we disappeared, the seller's not loosing too much anyway. (Probably the price he/she has in mind to sell for a straight sale anyway.) The most important thing to them is, the item is removed from their premises.

To answer your question, "The vendor had the option to say no"

Actually, the vendor wanted $850 for the fridge, when I explained the terms, he asked for an extra $50 for the trouble. So I agreed to his terms and bought it for $900.

I also said to him, here's my number, if you get a cash offer before the weekend, just call me to let me know that you've sold it. On Thursday the Vendor called me, asking what time on the weekend I'll be coming (I hadnt even bothered to arrange transport till then - expecting it to be sold).

With property we make similiar offers, the difference is that a solicitor is involved, and because they are paid to be advisors, they always advise their client to stick to a striaght sale. Why?, because after settlement thats it, whereas my offers linger around a little. Can't be helped, but I expect as the market cools and people are looking for best offers, me offering little movement on price, will make my terms much more acceptable.

Example, we made an offer recently to buy a house, where the end purchaser (ie wrap) had no deposit. The vendor had previously agreed to;

1) drop the price $10k
2) pay $1500 towards buyers legals

Even then the buyers couldnt buy (because they had no deposit for normal lenders).

So we stepped in, but in exchage for buying at fair value and for rebating the vendor $1500 at settlement, we wanted the deposit vendor financed.

This meant the vendor would get the majority of the $$$ straight away from our 1st mortgage, plus interest on the remaining at a price he wants, without a further 2% discount (which is what $1500 would have equated to).

Instead the vendor's solicitor passed up our offer. The vendor has decided to defer the sale.

I think I'll call the solicitor again next week, ie last chance sort of thing :)

Michael G

Originally posted by paulzag
Michael tends to go flat out with these creative offers. Gives him an edge, toughens his skin (and occassionally ticks me right off :D .

By that I mean I often say to myself "No way I could get away with that". And then Michael shows up with his Cheshire cat grin teaching me another lesson on how to apply this stuff somewhere new.

Way to go gang (I'm sure Yuch had something to do with it.

Each to their own, Yuch does bigger ticket items like pianos and gas heaters :)

At the moment there's a person at my work who owns a car. She bought the car on 12% finance, I think she still owes about $8-9k on it.

The thing is, she plans on moving overseas at the end of the year.

We've been tracking this deal for a little while, every couple of months the price drops. After we saw the price drop twice we contacted her and made an offer.

Our first best offer, was to have the owner contact the finance company and let us take over the finance after negotiating a drop in interest.

We would have written a sob story for the owner too sign and to take to their financier, but she didn't want to, it was too much hassle???

Alternatively it was going to be a wrap, but the owner pays the difference in interest rates. That wasn't as favorable either (of course).

Next time we see the car ad, we'll contact her again, and see how offer sounds then.

Why would we take the time?

1) Its interesting to see what you can do.

2) The car has an aparent market value of $17k

Michael G
I am just thinking about posting the "Car deal"!!

The actual offer is as follows:


It was nice speaking to you this morning.

I thought about the options we have and here they are:

You sell the car to me @ your asking price $8,800. Since I don't have the finance ready, I will need to arrange an instalment contract with you and you charge me an interest rate of 7%, which makes the repayment $255. per month, based on a 3-year term contract. (This is what I can afford anyway and it reduces your liability to $85/month. And the most important thing is you free up a lot of money for you to do other things.)

Since refinancing the car is not an option, as you don't want to incur extra fees for refinancing. However, you can ring up your financier and tell them that you are going overseas soon and you've been trying to sell the car for a long time. There have been a lot of people making enquiries but no one has made a decision to buy. And now you've found a buyer who wishes to buy your car, but her condition is to take over your finance @ an interest rate of 6.5% based on a 3 year term (my repayment will be $270.). Or alternatively, purchase the mortgage at 30% discount ($6,160) but still remain the interest rate at 12%, ie my repayment will be $237.70.

With the first scenario, you free up $255/month. And you remain the car owner until I pay off the car, however, to ensure that you don't sell the car to someone else I will have to place a caveat over the ownership of the car.

Whereas the second option, you walk away free and clear. The rest will be between me and your finance company.

Anyway, it doesn't really matter which way I go, I should be able to clear the mortgage sooner than 3 years. Here I have enclosed the loan calculation spreadsheet Car.xls that shows my calculations. If you have any questions, please do not hesitate to contact me.


And she replied:


I have played with the figures a bit and this really isnt a viable option for me for a number of reasons :

1. I dont want to have to continue paying for a car I dont own
2. I dont want to have to organise payments from overseas
3. If I pay $85 per month for 3 years it equals $3060, so essentially I am selling my car for $5500 and I am not prepared to do that.

And the final reason I guess is that I dont want to have to worry about this. I just want to pay it and get it out of the way instead of having all this hoohar to deal with.

So far the banks haven't been very helpful, so I cant see them being so now.

I am sorry, I would dearly love to help you, but I just dont see how this benefits me at all.


She didn't get her calculation right, so she thought I was ripping her off. :)
Just a thought....

Sometimes it is good to remember alternative options available when doing EVRY deal.

In this instance, I would do the following.

1/ Based on the Market Value of $17K, I would check the REDBOOK value of the car (dealers guide to wholesale/retail prices).
2/ If Retail is 17K, then wholesale is probably 13-14K.
3/ I would look in the paper for the "Cars wanted - cash paid" and call them up and say i had a car to sell. Find out which ones were interested and where they are located. Possibly go for a drive where lots of car yards are and look for the "Cars Wanted" signs.
4/ One 1-2 dealers were located, take the car for a test drive to these dealers and get them to make an offer.
5/ Take the highest offer and pay the original owner their 8K.

6/ End result.....$8,000 - $9,000 for about 2 hours work.

Good luck!!


Like all things the tax office is onto this. There is a limit on how many times you can do this each year before they decide you are a trader.