Interest Free Windows will cost £800 more than Cas

paul_richardson_2

Hi Guys,

I've had a quote from Launa Windows for Double Glazing for most of my house.

They offer Interest Free Credit, for 3 years, but:

If I pay Cash (or Cheque) I get the same windows £800 cheaper.

Is this legal?

It sounds to me like Interest Free Credit is costing £800 over three years.

Looking forward to your comments.

Regards,

Paul

visidigi

It is legal - the product is a different cost dependent on what type of payment you make.

The interest Free option isn't costing you £800 over three years, the product is costing you £800 more because you choose interest free.

Its important not to confuse the two.

fluffnutter

Yes, it's legal. And very common. Utility companies, insurance companies etc. usually vary the price depending on the method of payment. I can even remember it being relatively common in shops too, particularly electrical stores, where you could often secure a discount by offering cash rather than paying by credit card.

Meepster

At the end of the day, Interest Free Credit costs the retailer. If the interest free period for 3 years, then typically that would cost them around £50 to £90 (depending on the finance company and the rates they get) for every £1000, therefore they would have to retain extra margin on a sale to cover their costs.

If you're paying cash, then you can pretty much guarantee that they will knock of the amount the IFC was going to cost them.

Remember: Just because something is FREE, doesn't mean it doesn't cost anything...

Hintza

They are advertising the Corsa on interest free last night on TV and my immediate thought was bang goes the 20% discount (or most of it) you ought to be able to haggle.

Meepster

Talking about haggling...

A few years ago I was looking for a new settee, DFS had a sale on (yes, really, a sale at DFS, who'd have thought it?? lol) and they had the "pay nothing for a year and then interest free for 3 years" thing running. I saw a settee I really liked (and before anyone starts, it's still in full working? order and hasn't combusted, fallen to pieces or anything in the years I've had it) I told the salesman I wanted to pay cash as I really couldn't be bothered with the IFC and asked what deal they could do for me. His reply:

"That's the price it is, doesn't matter how you pay for it"

So after 10 minutes of him dismissing any thought of knocking anything off the price, I told him fine, I'll take it on the IFC option instead and no I didn't want any extended warranty, stain protection, cover against being abducted by aliens etc etc (this is where the sales people in DFS and other furniture shops make their real commission).

Suddenly, a manager who had been lurking about 20 feet away from us ran over and whispered something in the salesmans ear, Said salesman then sloped off to the office. The manager then said if I paid cash he'd knock £75 off the price. I thought I'd have a little fun so insisted I'd take the IFC, a few minutes later he bumped the discount up to £100 for cash. I shook his hand and we got the paperwork done.

Stood chatting with the manager for a few minutes afterwards and I even said that if the salesman had of offered me £50 off, when I first asked for a bit of a deal, I'd have taken it and maybe he should mention that to the original the salesman...

If ANYTHING mentions IFC and you want to pay cash, make sure you haggle your heart out!

paul_richardson_2

Meepster wrote: »

Remember: Just because something is FREE, doesn't mean it doesn't cost anything...

Hi Meepster,

Thanks for taking the time to reply.

I think the concensus of opinion says that charging more for Interest Free Credit is in fact legal.

But your comment that something that's free has to cost something doesn't make sense to me.

Regards,

Paul

Meepster

paul_richardson wrote: »

Hi Meepster,

Thanks for taking the time to reply.

I think the concensus of opinion says that charging more for Interest Free Credit is in fact legal.

But your comment that something that's free has to cost something doesn't make sense to me.

Regards,

Paul

Hmm...ok, look at it this way.

If the windows you were buying were "buy one get one free" then the initial cost of one window would be inflated to allow them to be able to give the second one for free.

Likewise, as you've found out already. IFC costs the retailer money to provide. This cost will be offset against the price of the goods. If for example; a company needs to sell an item at a 20% profit margin, but the IFC costs them 5% of that margin, they would sell the goods at 25% to cover the extra costs...

That make sense?

meercatsunited

only pay by cash if you know this company or its been recommended, paying by credit card would give you more protection.

2Sheds

A few years ago a local firm quoted me £8k to double glaze the whole house, 2 doors, 8 windows all with 2 openings and new soffits, guttering, downpipes etc

I offered them £6k cash, done deal :j

mo786uk

Sorry but I think some of you have misunderstood the law. The legal view is that if credit costs more than the cash price then it includes interest and cannot be called 'interest free'.

Example: windows cost £1000 in cash.

If the credit option is interest free and you pay £1500 - then you are quite clearly paying £500 in credit costs. It is not interest free, its just a way of trying to advertise something as interest free when its not.

The Credit Advertising Regulations say:

A credit advertisement shall not include—
the expression “interest free” or any similar expression indicating that a customer is liable to pay no greater amount in respect of a transaction financed by credit than he would be
liable to pay as a cash purchaser in relation to the like transaction, except where the total amount payable by the debtor does not exceed the cash price,

Which says to me you can only you the term 'interest free' when you can buy the item for the same price with cash or on credit.Therefore the OPs example is NOT interest free.