The Zero Interest Loan Game

  • By:admin

We have all heard the commercials – usually for larger consumer purchases such as cars, furniture or electronics –  offering zero-interest financing for a stated period of time. Great deal, right?

Well, maybe not. Astute businesses do not loan money for free; there is always a cost. In these instances, it is quite likely that you’re being quoted a higher sales price that includes both the actual value of the goods you’re financing and an additional amount that would otherwise have been collected as interest.

These deals often have a catch on the backside, as well.  If the total is not paid off in full within the stated time, there may be a provision that causes interest to be added back to the date of the original purchase – potentially years’ worth of extra-interest tacked onto an already inflated sales price!

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