Catalogue loans used to be a very popular way to buy anything sold in a catalogue, from white goods and furniture to clothing and shoes. These days, selling through magazines tends to be a much smaller practice and reaches a relatively small demographic. Instead, you might be aware of buy now and pay later schemes when shopping online as these are essentially the modern catalogue loan as they allow you to spread the costs of your shopping into affordable chunks. But catalogue loans still exist, and they can be a good way to finance expensive purchases – especially if it’s a need rather than a want.

What is a catalogue loan?

A catalogue loan is a finance option offered by certain catalogues. It spreads the cost of your purchase, typically over one or two years. Interest is charged for your borrowing, and the interest rates vary across providers and products.

Why are catalogue loans popular?

Catalogue loans allow you to keep control of your money by splitting a large expense into smaller, more manageable repayments. Not everyone has the privilege of being able to buy expensive things outright, and with inflation at its highest rate in thirty years, it’s unlikely this situation is going to change any time soon. Instead, people have to consider how they can budget for pricey necessities like ovens and washing machines, or even school uniform and cars. It’s therefore not uncommon for people to look at where to borrow money to finance these things, and so it makes sense that retailers may offer their own finance options. It can be convenient and the only way some people can afford to make the purchase.

When should you use a catalogue loan?

While catalogue loans offer you slightly more freedom in your budgeting, they’re not always the cheapest borrowing option and the long loan terms could result in you paying more interest than you needed to, had you found a shorter-term option. While you may not be able to afford to purchase the item in one payment, you may only need 3-6 months to repay the costs, whereas catalogue loans tend to spread the balance over 1-2 years. A longer loan period generally means a higher amount of interest is payable – even if the interest rate elsewhere is higher.

This doesn’t mean you should avoid catalogue loans at all costs: they’re still a viable borrowing option and if the interest rate is comparable to mainstream credit services, you can use catalogue loans to help you manage your money. But you should consider if it is the most suitable option for you, given your current budget and your future finances. While catalogue loans let you spread the financial impact, there may be alternative credit facilities that are better suited to your financial situation.

Catalogue Loan Alternatives

Using a catalogue loan needs to be a considered decision, and you should weigh up all your options before applying for the credit. Do you have savings you could use towards the purchase? Do you have a low interest rate credit card? Or maybe you have a 0% interest rate on your arranged overdraft limit? If you haven’t got any of these options, there is also a variety of loans online that could support your purchase instead.

More important than choosing how to borrow the cash is making sure you can afford the repayments. While catalogue loans and other lending products can help you spread the cost of expensive necessities, there’s little point in using them if the repayments will land you in financial difficulty or worsen an already sensitive situation. There may be cheaper ways of acquiring the items you need – people often give away whitegoods (fridges, washing machines, microwaves) online or on social media platforms for free, and you can often get second-hand school uniforms from the school if you need a little help. It may only be a temporary solution, but if it means you can sort your finances out in the meantime, save some cash, and be in a better position to make the purchase later on, it might just be worth it.