how can retailers offer no interest//downpayment for 1 year.?

Question

I often wonder how car dealers, furniture dealers, etc can offer merchandise interest free and with no downpayment for six months to one year? How do they do it?

Answer 1

The price of the item is jacked up higher than the regular price, but they are not going to tell you that. Believe me, they have this figured out in the price, so you actually pay more, when you do this, but, you got to have excellent credit, to do this. Nothing is free.My friend was looking at trucks, and the dealer advertised , no down, low payments, and in the long run, you are paying more for the truck. Also, it is excellent advertising, when the retailors, and car dealers, etc. do this, so they can increase sales. I think good idea, as far as the retailor goes.

Answer 2

There are a few ways that subvented rates are paid for:
1. The seller pays. The furniture or electonics store pays the lender a fee to make up the the lost interest.
2. The seller makes up some of the lost income on higher sales.
3. Not all the customers who come in for the promotion actually take the promotion, but end up buying something, so again higher sales volume for the seller.
4. Customers who get the promotion will use the account at a later date.
5. Some of the cost is offset by the customers who carry a blance past the promo date.
6. Some of the customers pay off the accounts early, even with a low rate, reducing the amount of lost interest.

Answer 3

They are likely to work with banks or financial institutions to absorbed some of these costs. However, nothing comes free for six months to a year. The interests they charged thereafter could be huge. Do read the find prints if you're heading that direction.

Answer 4

You pay for it. The cost to carry the loan is included in the price. Same with any added equipment or gifts. You pay for that free toaster. This does not mean that you don't get a better deal than you would otherwise.