Egyptian economic expert Saced Imbaby has cautioned against purchasing gold and silver through consumer financing programs and then reselling them for cash. He emphasized that this approach may lead to high financing costs compared to the actual amount of money obtained. Imbaby noted that gold and silver are primarily used as hedging and savings tools, not traditional consumer goods.
Imbaby explained that some clients might buy gold on installment and then sell it to obtain cash, while still being obligated to pay financing installments and interest. This can result in higher liquidity costs compared to the gold's purchase value. He provided an example of a 100-gram gold bar, which may cost around 730,000 Egyptian pounds, but the total amount paid by the customer through installment could exceed 1 million pounds after adding interest and financing costs.
Imbaby stressed that considering the interest on a monthly basis only may give the impression that borrowing costs are limited. However, calculating it annually reveals a higher cost. For instance, a 2% monthly interest rate is equivalent to 24% per annum, while a 3% monthly interest rate amounts to 36% per year. He advised customers not to make decisions based solely on the monthly installment value.
The expert emphasized the importance of calculating the total financing cost and the final amount due before making a purchase. He recommended that customers should consider all associated costs, especially when the goal is to resell the gold and convert its value into cash. This way, customers will be fully aware of their financial obligations resulting from financing.
Imbaby's warning comes as gold prices continue to fluctuate in Egypt. Recently, the prices of gold have been on the rise, making it essential for customers to be cautious when making purchasing decisions. The expert's advice aims to help customers make informed choices and avoid potential financial pitfalls.
The use of consumer financing programs for buying gold has become increasingly popular in Egypt. However, Imbaby's warning highlights the need for customers to carefully evaluate the costs involved. By doing so, customers can avoid unexpected financial burdens and make more informed decisions about their investments.
In conclusion, Imbaby's warning serves as a reminder for customers to exercise caution when buying gold on installment and reselling it for cash. By understanding the true costs of financing and the potential risks involved, customers can make more informed decisions and avoid financial difficulties.
Key points
- Expert Saced Imbaby warns against buying gold on installment and reselling it for cash due to high financing costs.
- The total cost of buying gold on installment can exceed the initial purchase value by a significant amount.
- Customers should carefully evaluate all associated costs before making a purchase decision.
