Paying off Alienware laptop using Preferred Account?

Well, last year I was looking for a laptop, and bumped into the alienware website which offered this awesome laptops, and offered a 12 month no interest plan. Since I do not have a bank account I asked my aunt if she could buy it for me and I would give her the monthly payments.

The price for the laptop was 1,976.37 dollars, and I still got the order detail email to make sure.

My aunt was actually paying the laptop using a dell preferred account, which I have access to, but im slighly confused on how it is working.

It says Credit Limit: 2,500$ and credit balance (as of 1 year of monthly payments): 2,340$.

She gave me the Last Dell statement she got by mail, and it says this (which is what confuses me):

Previous balance: (2,357$) - (Payments and credits: 70$) + (Purchases/other charges: 0$) + (Interest Charges: 54.01) = Account balance 2,340.38


On the bottom it says Annual Interest Rate 28.99%

Is the 2,500$ the total amount for the laptop? and did I seriously give her 70 dollars monthly (840$ in total so far) so the amount to be paid is still 2,340?

Please someone give me a hand with this, since I'm new to how these things work

Also: I'm asking for help here because I want to be prepared when talking with a dell person who I will barely understand

 

You can't just go into a payment plan expecting not to pay extra fee's. It defeats the purpose more or less.

What you see there is what you have to pay. A few hundred extra dollars is not bad actually. Have a look through the FAQ's.

 

You need to talk to Dell directly about your account to get the details on what is going on with your account.

The problem with a 12 month no interest plan is that if the purchase is not paid off in full within the first 12 months, then the interest you didn't pay, is then tacked on to the balance owing. At least that is how I think it works.

So if you saved, as an example only, $600 in interest in the first 12 months and you still owe on the laptop after 12 months, then that $600 is added on to your balancing owing.

Plus of course, you're being hit with additional interest every month (28.99% annualized!!!), in your example $54, which is added on to your balance. If your making payments of $70, you're really not going to get very far paying the loan down. You need to seriously increase your payment amount. Throw every dollar that you can muster at this loan to get it paid down.

As far as your last statement, it's pretty straight forward:

$2,357 (total you owed as of last statement)
-$ 70 (minus the payment made)
+$ 54 (plus new interest charge for the month)
$2,340 (new balance that you owe)

You can see that your overall balance went down by $17. At this rate, it may take more than 10 years to pay down! So again, you need to seriously increase your payment amount if you can.

Again, I don't really know your details and I'm just guessing at the details, and so you (your aunt) need to talk to Dell to discuss the account and determine why the balance is not lower, as you expect. Good luck.

How many months has it been since you purchased the laptop?

 

12 Months since I bought the laptop, and reason why I bought it on payments, was because on the check out, it said 1976$ or 70$per Month (which looked fine for me)

 

What I am not understanding is: why did the payments begin at 2500$, when the laptop cost 1976.37.

So in reality im Paying 3,148$ every year for a 1976.37$ laptop?. I understand the whole interest deal, and that I should pay extra, But 1123$ extra??? thats more than half of the original price.

 

$2,500 is your credit limit, it has nothing to do with your balance or what you owe. It means the maximum that you can charge to the credit card is $2,500.

Like I said previously, you need to contact Dell if the numbers don't add up as you expect and have them explain all the details.

Perhaps (and this is what I would do if I were you) they can send you a history report of all payments and interest charges over the last 12 months. That way you can review the charges in black and white, and see if there are any errors, etc.

Call them and ask for this. They should oblige you.

 

ohh, ok man, thank you for the help.

I appreciate it a lot

 

You're welcome!

 

Was anything else ever charged other than the laptop? If it was only the laptop, then the first year of bills should have all been no interest, but then the next one would have been a large amount. $70 is just the minimum payment, but if interest is $54.01, then yes, it will take a long time to pay it off. The bill will should how long it will take to pay the balance if you don't charge anything else, then under that, it will give a dollar amount to pay the balance off in three years if you don't charge anything else. I'm guessing that other things were charged since the balance is more than the original purchase unless fees were charged.

 

Nothing else was bought, so nothing else should be charged and we've been paying the interest from day 1. We never got the "12 month interest free"

 

You need to go back to the original order confirmation and see if it states that you had the promotional interest when you bought it. If so, the first 12 months would not accrue interest only if you paid the full system off in 12 months. At your purchase price, this would have been somewhere in the neighborhood of $160 per month to get the balance on the computer down to zero. If there was still a balance at the end of the 12 months, you have to pay the interest that would have accrued over those 12 months. They are only interest free if you pay it all off within the promotional period. Your balance owed could easily be that much if you only paid $70 per month. At that rate, you paid off about $200 of the original price.

To give you an idea of how much you have to pay:
To pay it off in three years at that interest rate: $83/month for a total of around $3000.

Try this in excel to figure out what you can afford:
=pmt(.2999/12, 36, 1976.37)

.2999/12 is the interest rate per month
36 is how many months you want to pay
1976.37 is what your original balance was

put in the new balance to figure out how to pay that off.

I hope that helps a little.

 

Finally, to give you an idea of how it all turns out:

It will take you 48 months to pay off your computer at $70 per month. You will have paid a total of $3300 to Dell.

Hope that maybe helps a little.

 

If you miss a payment everything gets ugly and its hard to pay off a high interest loan since honestly the interest is almost as much as payments!

 

That does seem weird for Dell though. The payment on my account is a bit more than the interest, unlike my credit cards.

 

Think about it this way - rough estimate.

$2000 purchase. Interest at 29%. Calculates out to approximately 500 dollars in interest during the first 12 months if you continue to make the minimum payment.

It sounds like this may be one of your first credit based purchases - which is totally fine.

But definitely READ a ton on credit, credit cards, how they work, fees involved, debt calculators - etc.

Avoid them like the plague!!

Pay off the laptop as soon as possible by making larger payments and therefore paying less interest in the long run.

Obviously some of the things I wrote you probably already know, I'm not trying to insult you by any means - just writing things as if you do not know, to be helpful.

 

this situation is why my brother an i no longer speak. i let him use my dell account and after 2 years of paying (most late btw) he owed more than he originally bought the laptop for... trying to explain the whole apr and credit thing to him till i am blue in the face, but in the end he believed i had charged 2 more laptops on his dime... the credit thing is just a bad situation