When buying high-priced products, a zero-percent financing is often offered. Pros and cons of zero-percent financing for electronics. Zero-Percent Financing Compared to Car Loans – Car buyers should consider this with special offers from dealers. Frequently one hears providers with a zero percent financing lure. A zero-percent financing makes it allegedly possible.
Installment Loans Why zero-percent financing can be risky
In the pick-up market of the furniture store segment müller our customers can pay for their new couch or kitchenette in up to 72 monthly installments – without interest on the installment loan. Not only for furniture stores, the zero-percent financing is expanded. In particular, the furniture trade, but also the consumer electronics stores have recently made it increasingly clear that the new purchases can be paid by the customers in relatively small, non-interest-free installments.
While zero-percent funding used to take two years, traders today are performing better with extra-long mileage: recently, the media market and Saturn had been offering for 60 and 5 years, respectively, and furniture stores such as the United Kingdom. B. Segment Müller or Harddeck for six years. If a consumer took out a consumer loan from a house bank to finance his electrical appliance or piece of furniture, a similar deadline would quickly result in a drop of seven percent per year, despite the low interest rate phase.
With zero funding, these expenses are eliminated.
“This is already a considerable discount for the client,” says Dr. med. Mark Nider, Managing Director of the consulting and analysis company AGAGAGVHG Barkow. Such offers the trade “a good marketing story” for customer acquisition. When does such a bid make sense for the end customer? A zero-percent financing initially makes sense for consumers if they do not want or can not pay the goods directly.
“This can be the case, for example, if you currently have a financing bottleneck, but absolutely need a specific system such as a new machine,” says Stéphanie-Heise, finance specialist at the NRW Consumer Center. However, beneficial financing does not necessarily mean that the purchase price itself is a price bargain. “The customer should always make the price comparisons and check that the goods are available from other suppliers in cash and without zero percent financing, but at lower prices,” he recommends.
If you complete a zero-percent financing over several years, not only will you have a cell phone in your hand, but you will also be in debt longer term. As the duration of a credit agreement increases, it is even more difficult to estimate whether the lease payments can be serviced in any case – or whether other purchases have to be made at once and an unforeseen additional payment or repair jeopardizes the leasing rate.
In addition, with smartphones or console games, the question is whether the device will be intact in five or six years. What are the requirements for zero percent financing? For some traders, even small, thirteen-digit amounts can be financed for very long periods without interest; for other providers, this only applies to the higher order values.
The traders remain on a small scale only with appropriate creditworthiness to terminate the contract. This means for customers: “You should weigh how often and for what purpose they receive rates,” he says. Which customer is our partner? Although consumers make their new purchase from the retailer, they usually sign the loan contract with a house bank cooperating with the retailer.
â € œThe benefit for the banks: they won new buyers without much adver- tising effort, and in the best cases, they would end up with other goods from them as well. Consumers should be aware that zero contract financing involves two parties. If, for example, defects in the purchased item occur, this may result in the customer having to continue the payments until both parties have clarified the matter.