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0% interest
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TW1234
Posts: 218 Forumite
Where the purchase is linked to a 0% interest offer, can a variable rate commission arise?
I could never understand why it could be cheaper to take credit than pay in full so as to receive a dealer reduction of (say) £1000
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Comments
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No.
The commission issue relates to someone being given higher APR than they actually qualified for to get more commission. You can't (realistically) get lower APR than 0% so how would they get commission on increasing from 0% to 0%?
A new car is unlikely to have been affected in this as they got commission from the sale
It's cheaper for credit because they hope you will trade the car in at the end for the much lower GMV so they can resell the car and sell you another oneSam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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I wondered how long it would be before someone on nil-interest finance would ask the question.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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The issue with DCA is the conflict of interest that crystallised when the seller gave you a higher APR than the finance company was willing to lend at in exchange for more commission.TW1234 said:Where the purchase is linked to a 0% interest offer, can a variable rate commission arise?I could never understand why it could be cheaper to take credit than pay in full so as to receive a dealer reduction of (say) £1000
Given your APR was 0% do you really think the loan would have had negative interest (ie self paying off) but the dealership increased it to 0%?0
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