0% costs you more?????

wan2lan

Ok so i have done a quick search but couldnt find the answer.
I am looking at purchasing a high end mountain bike and to help i'm looking to take up some of the stores 0% offers.

One store told me on the phone that they offer 0% and they have a sale on at the moment to get rid of 2011 bikes from stock so i popped down at the weekend. They certainly have a sale on some fantastic deals and yes they have 0% finance available on 6, 12 or 24 month schemes. Brilliant so i have a look around and i start seeing something very odd, an example for you:

Bike price £2750
Sale price £1999.99
0% finance price £2500

So if i want to take out 0% finance in the above instance its going to cost me £500.01 more than if i bought the item at sale price and paid on a 0% credit card. Is that allowed? are they able to charge you more if you want to take out finance on a product? The sales assistant couldnt give me the reason why he presumed it was an administration fee, if it is i'd like to work in that department.
I walked away and said i wasnt interested in paying an inflated price for a product purely to get 0% finance on it.
Also worth noting this is an independent cycle store not one of your big named ones.

Any advice from any of you would be much appreciated, i actually really want the bike.

~Brock~

Whenever 0% finance is offered, the seller pays the 'interest' instead because he does not get paid the full amount of the loan by the finance company, who keep their profit element back.

It sounds - because he is already heavily discounting the bike - that he cannot afford to effectively discount it any further by taking the extra hit that doing a 0% deal would induce.

Most retailers get round this by stating something like "0% finance available on selected items".

wan2lan

Really, i didnt know that.
"All bikes and frames over £1000 can be paid for by a 0% finance loan" it says on the website and within the store.

So i am better off buying it on a 0% credit card then than buying it on their scheme.

[Deleted User]

if they are using false advertising report them to trading standards

MoneyMagic01273

I definately think this warrants a complain to Tranding Standards - if you can be bothered.

I don't believe it is acceptable to offer 2 prices - offering 0% finance if you pay substancially more upfront . That really is just a charge for finance by a different name.

Just my 2 cents. But I'm sure someone more legally savvy than I can give more knowlegable advice.

chanz4

The thing is its not false advertising as it is 0% intrest, but the purchase price is higher. Its just like companys that charge for flights etc.

MoneyMagic01273

Well, yes - thats their "technical" explanation for it.

However that certainly isn't always the view taken by Trading Standards when it comes to evaluating a consumer practice as "fair" or not...

MonkeyMad

They probably comply as they have clearly signed the goods as having two different prices.

chanz4

Its like buying a car, it used to be cash was cheaper than finance for the same reason

Eonel

0% financing does cost the company money and is often built-in to the price of the product. They receive your money in the future (interest lost for them) + the chance that you do not pay it back + inflation degrading the value of money. You will find very often that anyone offering 0% will offer a better cash price today.

I am not sure you will get much empathy from Trading Standards. It is essentially the same situation as an insurance company adding 10% to your insurance policy for paying by installments. It just reflects the time-value of money.

The way to beat the game is to get yourself a 0% credit card and pay the cash price.

MoneyMagic01273

Eonel wrote: »

0% financing does cost the company money and is often built-in to the price of the product. They receive your money in the future (interest lost for them) + the chance that you do not pay it back + inflation degrading the value of money. You will find very often that anyone offering 0% will offer a better cash price today.

I am not sure you will get much empathy from Trading Standards. It is essentially the same situation as an insurance company adding 10% to your insurance policy for paying by installments. It just reflects the time-value of money.

The way to beat the game is to get yourself a 0% credit card and pay the cash price.

Yes but the 10% added to your insurance is almost always quoted as a finance charge - with a calculated APR. Not a completely seperate insurance price f.r paying by installments.

Personally I would drop an email to local Trading Standards. They can look into it - or tell you straight off that its an acceptable practice.