INTEREST FREE - Is it mis-selling?

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  • Clive_Woody
    Clive_Woody Posts: 5,855 Forumite
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    CaptainPerfect wrote: »
    Of course you know the price but the price includes interest, as I have explained.
    If you are buying a £30k Honda there is probably £6k in interest. I want to buy the Honda for £24 cash, not £30K over three years. That is the point......its called maths. Furthermore, as the car only has a value of £24k, in 3 years it will have lost £8k in depreciation, down to £16k. Anyone on the interest free will have lost £14k after three years.
    If they can sell enough cars on the 0% finance deal making a decent profit why would they offer other deals making them no profit or a lot less profit.

    You are not obliged to buy their cars and equally they are not obliged to sell you their cars.

    Try CarWow or one of the online brokers as they offer significant discounts compared to what you will get on the forecourt....plus you will still quite likely end up dealing with the same dealership.

    As mentioned already, when a company offers a 0% finance deal it enables people who don't have the cash up front to pay over a longer term. The fact that effectively there is a premium built into the deal that covers the delayed payments is no major surprise.

    If you want a decent sofa try John Lewis, I don't think they do 0% finance, but then I've never asked when I've bought items from them.
    "We act as though comfort and luxury are the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about” – Albert Einstein
  • sourcrates
    sourcrates Posts: 28,878 Ambassador
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    I think the OP is confusing interest with discount.


    Originally Posted by CaptainPerfect viewpost.gif
    Of course you know the price but the price includes interest, as I have explained.
    If you are buying a £30k Honda there is probably £6k in interest. I want to buy the Honda for £24 cash, not £30K over three years. That is the point......its called maths. Furthermore, as the car only has a value of £24k, in 3 years it will have lost £8k in depreciation, down to £16k. Anyone on the interest free will have lost £14k after three years.


    Its not interest at all, its the dealerships margin, everyone has to make money at some stage of the process.


    30k is the cash price, and, if they offer interest free credit, which is unlikely, you will still pay 30k.


    If you could negotiate down the price to 24k, then that would be down to the generosity of the dealership, and would come off there margin, its nothing to do with interest, its down to the individuals negotiating skills.


    There is a certain line they will not cross, as they would make nothing on the sale.
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  • Penelopa.Pitstop
    Penelopa.Pitstop Posts: 1,145 Forumite
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    edited 2 August 2018 at 2:01PM
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    gycraig wrote: »
    I work at dfs its same price cash or finance so it is interest free.
    For that reason I took 0% loan, even though I didn't need it. If there's no difference between cash purchase and a loan, it's not worth using my own money. I can use loan company money and keep mine during payment period.

    And of course 0% is there to attract buyers. Let them think they are saving on interest, while they could just buy for cash with discount (car example). To explain how it works for finance company: customer pays £30K from mentioned example, finance company aquires car with huge discount and also gets VAT return. So it's half of purchase price of £30K.
  • JimmyTheWig
    JimmyTheWig Posts: 12,199 Forumite
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    Pixie5740 wrote: »
    Nobody has to buy a sofa from the likes of DFS though. Not being reliant on cheap finance the OP can give his custom to any sofa retailer he chooses.
    But if the sofa he likes is from DFS then he's paying for the finance that he doesn't need.
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
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    JimmyTheWig wrote: »
    But if the sofa he likes is from DFS then he's paying for the finance that he doesn't need.

    How likely is it that of all the sofas in the world DFS is the only company who produce a sofa the OP likes?

    If for some reason DFS is the only shop then OP can find his dream sofa in then he needs to make a call and decide if his dream sofa is worth the DFS price tag.
  • Clive_Woody
    Clive_Woody Posts: 5,855 Forumite
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    JimmyTheWig wrote: »
    But if the sofa he likes is from DFS then he's paying for the finance that he doesn't need.
    If he has the cash up front he can stick it in a savings account and draw it out as required to pay the 0% finance deal.
    "We act as though comfort and luxury are the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about” – Albert Einstein
  • gycraig_2
    gycraig_2 Posts: 533 Forumite
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    bris wrote: »
    Of course, nothing is interest free, in this case the interest cost is loaded into the price of the goods. Same interest to them, different way to charge it.

    Let’s say a company get charged 800 quid to lend the customers 5k over 4 years (completely made up number)

    If the finance company turned around tommorow and halfed that figure do you really think that would knock that off the price of the product ? Of course not they would just make more profit.
  • tempus_fugit
    tempus_fugit Posts: 1,189 Forumite
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    venison wrote: »
    I wonder when we will see, if ever a post headed "mis brought" its getting beyond a joke now all these mis-selling threads it really is.
    Or "mis-bought" even. ;)
    Retired at age 56 after having "light bulb moment" due to reading MSE and its forums. Have been converted to the "budget to zero" concept and use YNAB for all monthly budgeting and long term goals.
  • Enterprise_1701C
    Enterprise_1701C Posts: 23,409 Forumite
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    I think where they make their money is when people forget when the interest free period ends. Then they are often charged interest for the WHOLE period of the loan.
    What is this life if, full of care, we have no time to stand and stare
  • Gentoo365
    Gentoo365 Posts: 499 Forumite
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    List price on cars is a starting point for negotiation. If you have cash to pay and the dealer has targets to meet then you negotiate the price.

    If you think he is making undue profit offer less. If the deal is still profitable the dealer will sell the car.

    Doesnt really matter what other arrangements are in place.

    Search via carwow or some other site and there will always be some dealers who will offer a discount.
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