Offering 0% Finance - How Does it Work?

[realmaverick]

Good afternoon guys,

We currently offer finance to our customers through Hitachi and Barclays. In our industry it's a massively popular option, with the majority of customers opting for finance.

We offer 0% APR over 2 years, but we are charged by the finance companies to provide this service and thus eats in to profit.

Some of the national brands offer interest free finance over 3 years. I always wonder if the national brands are getting better deals?

We're putting several million pounds worth of business through each of the finance companies each year, yet they refuse to waiver the fee for 0% finance.

My understanding is the finance companies make their real money from the customers, who inevitably don't pay within the 2 years and thus incur interest.

Are there finance companies who don't charge this fee?

Any advice or insights would be much appreciated.

Thanks

 

[Energise Accounting]

someone like @Ian J may be able to help you out.

 

[Ian J]

Thanks EA but not my field of expertise and I haven't a clue

 

[oldoakey]

We have offered 0% finance before today but nowhere near your level our commission was around the 13% mark for 24 months . They make their money from the commission that you pay, the longer the term the more you pay. I cant see you getting this service for free, you could of course negotiate a better rate or tout your business around other companies offering 0% finance.

Some retailers offer a mixture of 0% and buy now pay later this may reduce the overall commission you would pay.

 

[Jackie0802]

There's no such thing as a free lunch! The customer gets 0% interest if paid over a (usually fairly short) period. But no finance company is realistically going to loan free money (and why would they?), which is where the commission comes in. You cannot legally offer a 'cash price' that would effectively punish people taking up the interest free option, but the commissions should be counted as part of the cost of doing business and treated accordingly