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Okay, so right now Best Buy has 0% APR for 18 months on expensive items (over $500 or something), and 3 years I think for things over $2000 or something like that. They profit because it's an incentive to buy their stuff, and because they catch you with severe penalties if you're late with payments or don't pay off your items in the time alloted. Now a no brainer question that pops up is, could you simply buy a $2000 item, sell the item on craigslist or ebay for cash, and have a free 0% interest credit card (??). Would this be legal? E.g., my questions here are:
1. Can I sell an item I bought on credit before it's paid off?
2. Can I intentionally purchase an item on store credit with the intention of selling it?
3. If neither, what are the maximum possible legal consequences of this?
4. Under what circumstances could you possibly get caught?
I know the third and fourth are horrible things to ask, and I'm very ethical and honest, but intrinsically there doesn't appear to be anything morally wrong about this action to me. Correct me if I'm wrong, but it seems to be that it's all plusses here, that:
A) I benefit because I get free credit.
B) the store I buy something from on store credit benefits because I made a purchase.
C) The person I sell the item to benefits because I have to knock of a little of the price to sell it.
D) If I recruit a reputable friend or seller (like on ebay), they benefit if I give them a small seller's fee.
(Of course, any costs or losses in this endeavor would take the place of paying interest rates, but it'd be a helllluva lot cheaper than paying 30% interest for three years!)
I.e. I don't have a huge moral problem doing something technically illegal that is in all respects moral, so I'm not just asking if this is legal, but the moral principles behind that law if it is. Hell, if Bank of America can legallycommit 8th-sin bank fraud against anyone who ever paid $400 in a single day for buying 10 overdraft packs of gum (literally) (raises hand), I think I have the right to explore the the ethics of giving away money to three parties to help pay for my grandmother's hip operation (or whatever). Thanks for your advice.
Okay, so right now Best Buy has 0% APR for 18 months on expensive items (over $500 or something), and 3 years I think for things over $2000 or something like that. They profit because it's an incentive to buy their stuff, and because they catch you with severe penalties if you're late with payments or don't pay off your items in the time alloted. Now a no brainer question that pops up is, could you simply buy a $2000 item, sell the item on craigslist or ebay for cash, and have a free 0% interest credit card (??). Would this be legal? E.g., my questions here are:
1. Can I sell an item I bought on credit before it's paid off?
2. Can I intentionally purchase an item on store credit with the intention of selling it?
3. If neither, what are the maximum possible legal consequences of this?
4. Under what circumstances could you possibly get caught?
I know the third and fourth are horrible things to ask, and I'm very ethical and honest, but intrinsically there doesn't appear to be anything morally wrong about this action to me. Correct me if I'm wrong, but it seems to be that it's all plusses here, that:
A) I benefit because I get free credit.
B) the store I buy something from on store credit benefits because I made a purchase.
C) The person I sell the item to benefits because I have to knock of a little of the price to sell it.
D) If I recruit a reputable friend or seller (like on ebay), they benefit if I give them a small seller's fee.
(Of course, any costs or losses in this endeavor would take the place of paying interest rates, but it'd be a helllluva lot cheaper than paying 30% interest for three years!)
I.e. I don't have a huge moral problem doing something technically illegal that is in all respects moral, so I'm not just asking if this is legal, but the moral principles behind that law if it is. Hell, if Bank of America can legallycommit 8th-sin bank fraud against anyone who ever paid $400 in a single day for buying 10 overdraft packs of gum (literally) (raises hand), I think I have the right to explore the the ethics of giving away money to three parties to help pay for my grandmother's hip operation (or whatever). Thanks for your advice.
This scheme works only if you can recoup all of the purchase price (including sales tax) when reselling. You also have to assign a value to the time you spend making the purchase and the sale at ebay.
There's also the effort you'll have to undertake in reporting the ebay sales as income, in which case you'd want to report the Best Buy purchase as a business expense.
The assumption is that you would be able sell things that you paid retail for the same amount on ebay/craigslist/ whatever. I think that is a false assumption. For starters how are you going to find people with CASH to pay you when you needed CREDIT to buy the expensive item?
What about sales tax? Shipping? No warranty? Expected discounts???
Not really a well thought out plan...
I don't see anything patently illegal about such a scheme, after all you are responsible for the DEBT regardless of whether you have use of the goods or have sold them; I just don't think there is much room to PROFIT from this...
A lot of work, a lot of risk of people not buying your item, but otherwise not illegal... besides that, you would have to buy a massive amount of items to make it even worthwhile... also warranty is probably voided when you "resell" it but perhaps the buyers don't care...
I wouldn't use Best Buy as a supplier, and I think your plan is loopy, but just how do you think retail sales works? Unless the payback document specifically cites the item as collateral, you are doing what thousands of businesses do every day. However... just like a car dealership, unless you get cash you better have a way to repo that is foolproof.
FWIW, when the credit cards were giving 0% loans with a max transaction fee of $75, I was taking out those loans right and left and putting the money in ING and other high interest savings accounts. I made a few bucks because I was organized.
I don't see what you guys think is so risky here. I wouldn't buy a golden elephant harnass, I'd buy the most common item at Best Buy that people buy locally on Craig's list that will certainly sell. I'm sure any top notch computer would do fine, but if I really want to be thorough, I could monitor Craig's list in my area for a month to see precisely what sells for what. It's nearly 0% risk. People sell new items all the time for a little less than the original price. Would you rather pay $1900 or $2000 for a new computer? It's a pretty even loss for the buyer if they loose out on the manufacturer's warranty even if it's nontransferable, because plenty of people would rather save a hundred bucks and loose the warranty, especially if it's a product from a reputable dealer. And besides, the warranty might be transferable anyway; I'd just have to look into it for the specific product I was purchasing. Yes, the one time resell hit would be a minor expense, but insanely less than a credit card with continuous yearly interest! Okay, so maybe it's not 0% credit, maybe it's a 5% Once Percent Interest (OPI) rate. And I wouldn't need to buy a lot of items; a single purchase maxing out the credit card would suffice. It might be a little work, but it's certainly not a lot of work. For the work of picking up the item, posting a Craig's list ad and taking a few phone calls once in awhile, you get a fee-free 5% OPI credit card!
The one thing I'm concerned about is reporting the sale as income, I didn't think of that. If I'm not into financing or business whatsoever, how hard would it be to legally cancel out the two costs (if possible)? Intrinsically (if not red-tape wise) it seems a perfectly legal endeavor. I'm simply exchanging the items I'm buying on a credit deal. Even if you reported the sale as income without taking into account the expense, that would just replace a normal credit card APR with the OPI income percentage, and you'd only pay it once rather than yearly over and over, so depending on your financial situation, credit status, and tax bracket, you could still easily profit if the income is reported.
Just for reference, what are the worst possible consequences of not reporting a large sale in this scenario as income? Would the law or a judge take into account the nature of the exchange in considering whether serious fraud has been comitted?
Last edited by squish303; 05-28-2010 at 11:35 PM..
What items are listed for on Craigslist is different than what items sell for, and you would have no way of knowing what actually sells. Your plan may not be risky legally, but it makes no sense. What's going to happen at the end of the 'free' credit period? You'll have a ton of debt you won't be ale to pay. Why not just get a credit card and pay it off each month, that would be interest-free. If you can't afford to do that, then you can't afford the items you want to buy.
Okay, so right now Best Buy has 0% APR for 18 months on expensive items (over $500 or something), and 3 years I think for things over $2000 or something like that. They profit because it's an incentive to buy their stuff, and because they catch you with severe penalties if you're late with payments or don't pay off your items in the time alloted. Now a no brainer question that pops up is, could you simply buy a $2000 item, sell the item on craigslist or ebay for cash, and have a free 0% interest credit card (??). Would this be legal? E.g., my questions here are:
IMO this would be fruad since until paid for you do not own the item you want to resell.
Also this scheme is not only dumb but it's playing Russian Roulette with a fully loaded gun! There are so many, many ways this scheme could go very, very wrong.
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