Archive for category Finance

Is Interest Free Credit really free?

Posted by David Hurst in Finance on November 21st, 2008

No, it’s not. The interest is paid by the company selling the product, therefore the interest is built into the price of the item. The natural thing for companies to do when sales figures slump is to discount the products, but this can cause problems. Firstly, will the customers still want to by the product when the price inevitably goes up again? Secondly, what about the customers who just bought at the higher price?

Motorcycle manufacturers always seem to come up with 0% finance deals through winter. This enables them to discount the bikes without actually appearing to do so.

The savvy buyer then would always take the 0% finance option. Frankly, you’d be nuts not to. You’re paying the interest on the product already (albeit stealth interest), so you may as well take the credit and leave your money to earn interest in the bank.

Just bear in mind that every credit application you make leaves a footprint on your credit file and lenders aren’t keen on seeing more than a couple of applications in a six month period.

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