When a customer buys a product from a store, the store may allow the customer to finance the purchase. The store usually charges interest on the purchase as the customer pays it off. Under the terms "60 days same as cash," the customer has 60 days to pay off the loan without making any interest payments. The store will only begin charging interest after this period ends.
Time Frame
A store can set its own period in which the purchase does not incur finance charges, so the period does not have to be 60 days. The period can be 30 days, 90 days or however long the store management chooses. A longer period means that the store is losing out on interest revenue, and the store will lose purchasing power during a period of high inflation, so stores usually try to keep this period as short as possible.
Terms
A retailer who offers 60 days same as cash may also abbreviate this offer as "Net 60." This statement simply means that the buyer must pay the invoice within 60 days to avoid interest expenses. Sometimes the retailer quotes an offer such as 5 percent 10, net 60, which means that the buyer gets a 5 percent discount if the buyer pays the invoice within 10 days.
Money Management
A customer who has the cash on hand to cover the full purchase price of an item can benefit from taking advantage of a 60-days-same-as-cash offer. The customer can invest the money for 60 days in an account that does pay interest, or use the money to pay down a high-interest loan and then borrow additional funds or withdraw money from an interest-paying account before the deadline.
Taxes
A federal or state law may apply to cash purchases, but not credit purchases. The state of Georgia, for example, establishes sales tax holidays--that is when a buyer who purchases an energy-efficient appliance with cash does not have to pay state sales taxes. The state considers a 60-days-same-as-cash purchase equivalent to a normal cash purchase from a retailer.
Refusal
A customer may decide not to accept the 60-days-same-as-cash term and pay later for the item, making additional interest payments. Interest expenses are deductible from income taxes. The retailer may also charge a lower interest rate than the customer's other lenders charge.
