A frequently overlooked topic in discussions about personal finance is how to best purchase durable goods. Durable goods are products that don’t have to be purchased frequently, usually last for longer periods and are typically kept for five years or more. This definition encompasses a wide range of items such as automobiles, appliances, home and office furnishings, lawn and garden equipment, consumer electronics, tools, sporting goods, photographic equipment and jewelry.

Since purchase prices for some durable goods can be pretty steep, most Americans can’t simply pay for them out of their monthly discretionary income. So even if they involve economic essentials, like buying a car or replacing a furnace, decisions about how to pay for durable goods are rarely as simple as writing a check or swiping a credit card. Paying for durable goods usually requires some planning.

In some cases, consumers can save up for durable goods, because the item they want is an eventual replacement or upgrade for something they already own, like a car or bedroom furniture. Or it is a non-essential or recreational item—until you can afford it, you can do without it.

But some durable goods are harder to do without, and many consumers either don’t have the time or economic resources to accumulate savings to pay for them. Financing is the only practical option.

For larger and popular durable goods, like automobiles, consumers may be able to finance the purchase through a bank loan. But today, banks seldom make unsecured loans for individual durable goods; most purchases are financed either with a personal credit card, or directly by the manufacturer. Because these loans are secured only by the borrower’s promise to pay, the interest charges can be substantially higher than loans collateralized by real property (i.e., an automobile). Thus, from an economic perspective, durable goods purchases can be some of the most expensive transactions in personal finance.

Interest-free isn’t really free (but you knew that, didn’t you?).

An attention-getting finance option offered by some retailers is a zero-interest loan. These loans are advertised with phrases like “one year same as cash,” or “0 percent APR,” and sound like they are allowing consumers to “save” after buying, instead of before. But if many consumers are willing to pay high interest rates to obtain a durable good, why would any lender offer zero-interest loans for the same products? The answer: The cost of interest-free financing can be recaptured somewhere else in the transaction.

Consider the factors in a typical zero-interest finance transaction for a car.

• The offer is underwritten by the automaker (or its in-house financing arm), and often applies only to new vehicles—the ones with the highest sticker prices.

• Selecting the zero-interest option often disqualifies the buyer from other discounts, such as rebates, that might lower the car’s purchase price.

• The zero-interest payment period is often much shorter than a typical auto loan, sometimes just 24 months. Shorter terms result in higher monthly payments—even if there aren’t any interest charges.

• In some zero-interest finance agreements, a single late payment can change the status of the loan, incurring interest charges retroactively on the full amount financed.

• Zero-interest loans are offered only to qualified buyers. According to an August 2014 article by Tara Mello posted on bankrate.com, only 10 percent of shoppers have good enough credit to qualify.

Here’s a hypothetical example of zero-interest financing:

A 24-month zero-interest loan for a new car with a list price of $24,000 results in a $1,000/mo. payment. If another buyer applies rebates to buy the same car for $22,700, and finances the purchase at 5 percent interest for 24 months, the monthly payment is also $1,000. The interest “lost” by the auto dealer (who is also the lender) on the interest-free loan is recovered by the higher purchase price. Surprise, surprise, there’s no free lunch—or truly free financing.

Since many consumers intend to keep their cars for longer than two years, the option of a longer loan period with a lower monthly payment may also be more desirable than a 24-month loan, regardless the interest costs. A 48-month loan at 5 percent for $22,700 (the discounted price) results in a monthly payment of about $520.

If a $1000/mo. payment is affordable, but you also believe it’s likely you will keep the vehicle for four years or longer, the question arises: Is it better to make $1000/mo. car payments for 24 months, then save $1000/mo. for the next 24 months, or save $480 each month for 48 months?

Over four years, Option 1 delivers a $500 accumulation advantage, but requires postponing saving until the loan is repaid. From a big-picture perspective, many households might prefer Option 2, because they build savings immediately, and have a lower monthly obligation.

Better to save? Maybe not.

Given the somewhat illusory benefits of zero-interest loans, it might seem desirable to always pay cash for durable goods. But several factors could indicate otherwise.

Even cash purchases have a finance cost: it’s the opportunity cost, or what you lose in future earnings when you decide to spend your savings. When the loss of future returns in a savings account is projected to be less than the cost of external financing with a lender (i.e., giving up 1 percent in future returns on $20,000 or paying 5 percent interest to borrow it), cash might be the better option. Conversely, if the current rate of return on savings exceeds the interest rate for borrowing, there’s a reasonable argument for outside financing, because paying 5 percent interest could mean not having to liquidate assets earning 8 percent.

Another factor in deciding to pay cash or externally finance is one’s cash reserves. If your total cash reserves are less than three to six months of income, how does a $20,000 withdrawal impact your overall financial security? Financing a durable good purchase may not be financially efficient in terms of interest costs, but perhaps prudent.

The opportunity costs of spending cash, and the impact a large out-of-pocket purchase has on reserves, prompts other considerations. How much should one set aside for durable goods purchases, and in what type of account? On one hand, an escrow for durable goods should be safe and liquid. On the other hand, since these purchases are infrequent, leaving a sizable sum to languish in a secure, accessible, but low-interest savings account creates another opportunity cost by not allocating it to higher-yielding instruments.

One possibility: Life insurance cash values can provide a unique source of durable goods financing. While the rate of returns on dividends for mature whole life policies can exceed those offered by savings accounts, cash values have similar safety and liquidity characteristics. But a decision to use cash values for this purpose must also assess the impact of loans or withdrawals on the policy’s overall performance.

It’s understandable that retirement saving and education funding often dominate personal finance discussions; they are big-number, long-term projects. But don’t overlook the durable goods purchases that will be made in your lifetime, and their associated finance costs. Savings from better financing strategies could make it easier to achieve those retirement and education objectives.

By Elozor M. Preil