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Mac Musings

The $30/month iMac

6 November 1998 - Dan Knight - Tip Jar

This is the weekend Best Buy joins the ranks of nationwide Macintosh resellers in the U.S. This means Macs will be available in dozens of communities that have Best Buy stores but don't have CompUSA.

This will also be the first weekend that Apple offers iMac financing at roughly $30 per month. Or, to quote,

67 monthly payments of $29.74. 14.89 Annual Percentage Rate subject to increase or decrease. Payments deferred for the first 120 days subject to interest of $35.44. Loan origination fee of $54.13 charged on day 91. No prepayment penalty. Based on estimated retail price of $1299. No down payment. On approved credit. Tax and shipping not included. ISP fees not included.

There's a lot to like about the deal. The iMac is a lot of computer - and this makes it even more affordable. The $30 per month price tag (approximate, since $29.74 doesn't include sales tax, shipping, or add-ons) is very attractive. The interest rate is reasonable. And the deferred period means no payments until well after Christmas - not until March.

Still, I would think twice about taking Apple up on this offer.

First, because you end up paying almost $700 in interest and origination fees. That's more than half-again the price of the iMac itself. Great for Apple, but that really makes your iMac a $1,992.58 computer.

Second, and far more important, because it's a poor investment. Just like driving a new car off the lot, the minute you set up a new computer it depreciates. A lot.

The Internal Revenue Service presumes computers have a five-year life, at least as far as depreciation is concerned. It's rarely true for Windows machines, and just barely the case for Macs. But if you buy the iMac this month, you won't make your last payment until Fall 2004 (4 months with no payment, then 67 monthly payments).

That's six years from now, by which time the 233 MHz G3 iMac will seem as up to date as a 32 MHz 68030 Macintosh IIvx does today. The IIvx was introduced in October 1992. Sure seems like ancient history.

Since 1992, we've gone through the Quadra series and three generations of Power Macs to reach the iMac. Imagine how much more powerful Macs will be in six years after another three or four generations of improvement.

Moore's Law (capacity doubles every eighteen to twenty-four months) predicts today's 400 MHz G3 will evolve into a 3GHz G7 or 5GHz G8 processor with 512-1024MB standard RAM and about a 50GB hard drive.

And you'll just be making the last payment on your 1998 iMac.

Finance an iMac over almost six years?

I don't think so!

Addendum

I've received a lot of feedback chiding me for pointing out that six years is a long time to pay back a computer. Sorry, but it is too long to pay off a computer. If you have to finance, if you can justify the computer as an investment (especially for kids in the house), don't take six years to pay off the loan.
 
That's really all I meant to say. Financing adds to the expense of buying - the longer you pay, the more you pay in finance charges. If you can repay the loan in two or three years, you'll be able to replace the computer before it seems too outdated.

Further reading

Dan Knight has been using Macs since 1986, sold Macs for several years, supported them for many more years, and has been publishing Low End Mac since April 1997. If you find Dan's articles helpful, please consider making a donation to his tip jar.

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