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The part missing from this concern: taking out 0% financing is often a prudent move. This pushes out your cost structure and allows you to keep more of your mon

The part missing from this concern: taking out 0% financing is often a prudent move. This pushes out your cost structure and allows you to keep more of your money to make use (investments, etc) where you can theoretically earn interest. It also allows people to build their credit without a credit card. But yes: people shouldn't be using it to buy things they can't afford.

aaronchall 4y ago
A 0% financing bakes the seller's profit into the price paid and just makes it less rewarding to pay it off early.
- eoghann 4y ago
  Not always! I buy everything, including food shopping, on 0% credit cards and keep the money in savings accounts earning interest. I always have a matching amount in savings as the balance on credit.
  - bityard 4y ago
    What is the interest rate on your savings account?
- dhosek 4y ago
  When I graduated college, I furnished my apartment with furniture paid for with 0% financing on the Stør¹ credit card. Reading the fine print, if I didn't pay off the card in full by the end of six months, I would be charged some outrageous interest rate (over 20% IIRC—but this was 31 years ago so I could be wrong), backdated over the life of the loan. A lot of 0% financing works on similar bait-and-switch terms. If you look at the fine print on auto financing deals, it often requires a high down payment and short loan term and it's there more to get people into the dealership than anything else. Those few who are able to actually use it are considered an advertising cost. ⸻ 1. Stør was similar to IKEA but Danish and a bit more downmarkt
  - lotsofpulp 4y ago
    I have bought at least 3 vehicles with 0% interest loans, and no down payment. The seller would not give me a lower price if I paid all or a portion in cash at the time of purchase. The only cost to me is the effect on my credit, but that is negligible unless if you are not excessively indebted.
- KMnO4 4y ago
  By the do you mean you’re paying the “interest” cost of the loan as part of the sticker price? If so, that’s not always the case. I used to offer 0% and absorb the cost of the financing (which cost me approx 2% of the profit) because it meant purchases from people who otherwise wouldn’t buy it.
wbsss4412 4y ago
> It also allows people to build their credit without a credit card. I actually looked into this when I first saw these companies spring up, as I figured it couldn’t hurt to build up my credit some more, for free. Unfortunately, unless I was mistaken, what I determined was that these companies don’t report your positive activities to the credit bureaus. The net result is that there’s nothing but downside from a credit perspective.

aaronchall 4y ago

A 0% financing bakes the seller's profit into the price paid and just makes it less rewarding to pay it off early.

eoghann 4y ago
Not always! I buy everything, including food shopping, on 0% credit cards and keep the money in savings accounts earning interest. I always have a matching amount in savings as the balance on credit.
- bityard 4y ago
  What is the interest rate on your savings account?
dhosek 4y ago
When I graduated college, I furnished my apartment with furniture paid for with 0% financing on the Stør¹ credit card. Reading the fine print, if I didn't pay off the card in full by the end of six months, I would be charged some outrageous interest rate (over 20% IIRC—but this was 31 years ago so I could be wrong), backdated over the life of the loan. A lot of 0% financing works on similar bait-and-switch terms. If you look at the fine print on auto financing deals, it often requires a high down payment and short loan term and it's there more to get people into the dealership than anything else. Those few who are able to actually use it are considered an advertising cost. ⸻ 1. Stør was similar to IKEA but Danish and a bit more downmarkt
- lotsofpulp 4y ago
  I have bought at least 3 vehicles with 0% interest loans, and no down payment. The seller would not give me a lower price if I paid all or a portion in cash at the time of purchase. The only cost to me is the effect on my credit, but that is negligible unless if you are not excessively indebted.
KMnO4 4y ago
By the do you mean you’re paying the “interest” cost of the loan as part of the sticker price? If so, that’s not always the case. I used to offer 0% and absorb the cost of the financing (which cost me approx 2% of the profit) because it meant purchases from people who otherwise wouldn’t buy it.

wbsss4412 4y ago

> It also allows people to build their credit without a credit card. I actually looked into this when I first saw these companies spring up, as I figured it couldn’t hurt to build up my credit some more, for free. Unfortunately, unless I was mistaken, what I determined was that these companies don’t report your positive activities to the credit bureaus. The net result is that there’s nothing but downside from a credit perspective.