0% finance?

[rhinosaw]

Just received another quote for a new boiler installation, chap said he can do 0% finance for two years. Surely small companies don't normally offer these kind of deals, where is the money made, the quote doesn't seem OTT. I suppose the question I am asking, is this something to be cautious about?

 

[bernardgreen]

I suppose the question I am asking, is this something to be cautious about?

You need to act well before the end of the interest free period to ensure your payments start in good time. One day late in making the first payment and you are likely to get heavy penalty charges and possibly a higher interest rate as an extra penalty.

The finance companies depend on some customers being forgetful. The penalty charges more than pay for the costs of providing loans that for few years are "free" of interest

 

[rhinosaw]

Thanks for the reply Bernard

The whole amount is interest free over 2 yrs. The loan finishes end of two yrs, I will have no more payments to make, that's why I am a bit cautious.
Where do they make their money?

 

[Dan Robinson]

Small companies use a third party to underwrite and cover all the FSA stuff. Where the 0% comes in is as a fee on top of the monthly. So your loan will no doubt be 4, 5, whatever % higher than a base installation price.

There is nothing free under the sun.

 

[ianmcd]

we offered it at one time and the company that provided the credit took 16% nothing is free

 

[dilalio]

It's called factoring and, like everything, comes at a price for credit.

 

[Iamchamps]

You get more work if you can provide interest free finance. A small business can approach a company and arrange this for a fee. Like above it will be a percent so the small business either adds the fee on to the cost charging you or bites the bullet and covers it in the hope will get more business.

Omni capital retail finance one such company that does this for small businesses.

 

[rhinosaw]

Ok, thanks for the replies​