What really happens when one gets zero percent financing for a car, appliances, or a lot of other things? You just need to remember, ‘there is no such thing as a free lunch.’ Business cannot operate with free financing, in some cases for up to five years. It costs to have money tied up for an extended period of time. And, guess who is really paying that expense.
Contrary to what some people want to think, businesses must make a profit to stay in business. And, to increase their sales, a business will use many marketing tactics. One of them is the illusion of zero percent financing.
It is quite simple. The seller just raises the cost of an item, and adds fees and penalties should the buyer miss a payment, or some other fault in the contract. So, the real result is that one must pay a higher price for an item and even those that do not use the offered zero percent also pay the higher price. The end result for the seller is higher profits on all sides.
I have told the story before about my friend that had a store which offered some toy trucks for $1 each. They were not selling very well, so he put them in a big basket and placed a sign on them, two for $5. He sold all of them.
The moral of this story is also simple.
Think before you buy and make a commitment.
PMO
©2016
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