An instalment plan usually charges a one-time processing fee on the full purchase, then divides the total into equal monthly payments. Because you repay principal over time but the fee is charged up front on the whole amount, the effective interest rate (EIR) is much higher than the headline fee — roughly 1.8–2× the simple annualised fee.

For example, a 5% fee over 12 months looks like 5% but works out to an EIR of around 9%. A 0% interest plan (no processing fee) is genuinely free financing; otherwise paying in full is usually cheaper than an instalment plan, and far cheaper than revolving credit, which can charge around 28% p.a.