Interest Free Windows will cost £800 more than Cas

bris

mo786uk wrote: »

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'.

I don't see where anyone has misunderstood the law. The scenario you are talking about would have to be with two prices advertised, one with interest free credit, and one with a cash price.

As we all know there is no such thing as interest free, the retailer bumps up the price and pays the credit fee direct to the finance company, so the price is £500, the customer pays £500 in instalments, but the retailer pays the fee out of the inflated profit. As far as the customer is concerened they have paid no interest.
Offering a discount for cash can have advantages for a retailer, this would include not just saving finance fees but also credit card fees, it benefits both buyers and sellers, and cuts down on administration fees regarding the paperwork.

cardinalbiggles

Its illegal if the following happens.

You offer me a product interest free for £100 pounds and I say how much for cash now and you drop the price.

Its no longer interest free and breaking the law.

mo786uk

bris wrote: »

I don't see where anyone has misunderstood the law. The scenario you are talking about would have to be with two prices advertised, one with interest free credit, and one with a cash price.

As we all know there is no such thing as interest free, the retailer bumps up the price and pays the credit fee direct to the finance company, so the price is £500, the customer pays £500 in instalments, but the retailer pays the fee out of the inflated profit. As far as the customer is concerened they have paid no interest.
Offering a discount for cash can have advantages for a retailer, this would include not just saving finance fees but also credit card fees, it benefits both buyers and sellers, and cuts down on administration fees regarding the paperwork.

In the Ops example there ARE 2 prices. The cash price and the credit price. They should not be describing the credit prices as interest free, they shoudl be quoting it with the relevant APR.

We all know it costs businesses money to offer interest free credit - but that is the businesses problem. They shouldn't be advertising something as 'interest free' if they have added in their own costs - the point is it is not INTEREST free is it - because if you pay cash you get it £800 cheaper so if you buy it on credit you are paying £800 extra and that is a charge for credit.

The cash price has to be fixed. It is the credit price that should adjust according to any diso!!!!s given.

If the company want to dissuade credit purchases then they just quote a low cash price and then the credit price which will have a suitably high interest rate.

Jakg

I have to admit I didn't think it was legal to have a "cash" price or a "credit" price.

The FSA are fairly hot on the "charge for credit" being fairly laid out - if you can obtain a product for £x with cash, but the credit price is £x+y, then irrespective of interest etc then £y is the charge for credit - this applies to any sort of "finance surcharge".

Many Buy-Now-Pay-Later schemes have no interest, but a (usually small) admin fee - IMO this is perfectly reasonable, as long as it is CLEARLY DISPLAYED and it's not implied the finance has "no fees".

mo786uk

I believe any fees have to be included in the 'total charge for credit'.

The APR is mean to include raw interest and any other charges I think - so they cannot even seperate out £50 admin fees for credit.

There has to be a 'cash price' because that is what is used to work out the interest.