My experience buying a TV in Argentina

[TrevorCito]

For a long time I complained about the cost of electronics over here, including TV sets. They seemed much more expensive that the equivalent models back home and for no obvious reason. I now believe that I have found an explanation for the price difference which is "priced in inflation". Let me explain.

My faithful TV recent stopped working and I was forced to purchase a replacement. Reluctantly I went through the motions working out the best deal but discovered while calculating the amortization that if I factored inflation into my purchase and used my argentine credit card over 24 cuotas/repayments (0% interest) then inflaction would act in my favor and provide a significant discount.

Here's an example of what I mean (all prices in pesos):

Purchase Price: $6850

Quotas: 24
Monthly repayment: $285.42
Monthly inflation: 2.08%
Interest: 0% (This is very common here when paying in cuotas)

Inflation Adjusted Price: $5209
Inflationary Saving: around $1641

By paying over 24 cuotas, I actually save myself around $1641 as I'm not paying interest (which would cost me money) and inflation is high (around 25%) which acts as a monthly discount thereby saving me money as my repayments do not increase with inflation. If I purchased the TV outright the I'd have paid the full price: $6850. Crazy, nonsensical, absurd? Go figure!

Anyway, I thought this might help dispel the myth about electronics being excessively expensive. I've learned something new and thought you might like to hear about my expat experience.

Has anybody else come to the same conclusion or am I completely off the planet?

 

[katti]

That is the reason why so many argentines buy with quotas sin interes! And not because they can't afford to pay it all at once, as some people like to think. 100$ today is not the same as 100$ in 6 m months...

 

[zapatosgoma]

Yep, you are right and as katti said that is how argentines are doing it. Make sure your payments are in pesos (not U$). If you have the money, and feel adventurous, instead of paying cash you could park it in a 30 days plazo fijo, another ~11%

 

[DontMindMe]

Am I missing something here? I may well be, so let me explain.

100 pesos today means the same damn thing to a person's bank account as 100 pesos in 6 months if said person's wages aren't going up--account balance minus 100 pesos. I think I am missing the logic in this argument. To me, yeah, 100 pesos will seem like less in 6 months because everything is getting more expensive, but it seems like you're choosing the way you think about the price of the TV rather than accepting that it is expensive.

So yeah, buy that TV now because it will cost more in 6 months, and make all those payments because you can and they are interest free if you can't pay for it all at once, but why try to fool yourself into thinking that it's a huge deal just because you're making interest-free payments into the future?

I just don't see how you can view spreading a payment out into cuotas as actually saving money, inflation or not.

 

[Davidglen77]

[quote name='Don'tMindMe']
So yeah, buy that TV now because it will cost more in 6 months, and make all those payments because you can and they are interest free if you can't pay for it all at once, but why try to fool yourself into thinking that it's a huge deal just because you're making interest-free payments into the future?

I just don't see how you can view spreading a payment out into cuotas as actually saving money, inflation or not.[/quote]

Unfortunately, the downright perverse way of people being constantly acosed and robbed of their money unfairly here, has people trying to justify the reasons for it. Everybody here who comes from another country and knows about fair pricing, accessible credit, saving and investing for the future, well deep down you know that in this country, for now at least, those things are a far-off dream.

 

[cbphoto]

The op also forgot to mention that televisions purchase price would be 1/2 as much in the States...

 

[Crema Americana]

You're not "saving" money, but your money is going further than just sitting there depreciating. This is why Argentine's typically have very little savings - and what they do have is in dollars under the mattress. It makes no sense to have pesos lying around if it's going to lose a good portion of its value in a few years... not just due to depreciation but also inflation. Even $100 US won't buy you today what you could get a few years ago thanks to inflation.

And yes, electronics are still more expensive in Argentina than in the US no matter how clever you are with payments.

 

[PhilipDT]

[quote name='Don'tMindMe']Am I missing something here? I may well be, so let me explain. [/quote]
Yes it seems to me as you're missing some of the most basic notions of finance theory.

I'm not sure how to break this down more simply than the OP put it. Money itself is not worth anything, its only worth something in the sense that it can be exchanged for goods and services. Lets say for simplicity's sake that the OP's purchase was 2400 pesos, and he has 24 payments of 100 pesos.

Recently I went and bought a couple of orange bell peppers for about 10 pesos a kilo.

So lets say that the OP's first payment is worth 10 kilos of peppers. In 2 years on his last payment date, peppers will according to inflation cost about 16 pesos a kilo so his last payment will only cost him as much as 6.25 kilos of peppers would.

Over the course of 2 years our salad freak / tv buyer would have saved enough peppers many a meals

 

[scotttswan]

The op also forgot to mention that televisions purchase price would be 1/2 as much in the States...

It's still cheaper to fly to Santiago , buy a big LED tv with Chilean taxes, excess baggage and Argentine import taxes than to go down to your local electronics cartel (gabarino, compumundo etc).

Last time i looked Uruguay's lcds were much cheaper too.

 

[DontMindMe]

PhilipDT I know nothing about finance theory and won't pretend to; my own common sense is the only reason I have been able to survive financially here. So yes, I agree that it makes sense to make big purchases now rather than to wait for the price to go up. And why not make a bunch of payments if you don't have to pay interest?

But what happens if within the two years that the OP has to make monthly payments, the economy crashes and prices go way down? Wouldn't he/she then be paying for a very, very expensive TV?