Will 0% Financing Be Around Again This Year?

   / Will 0% Financing Be Around Again This Year? #31  
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Federal debt is $27 trillion. A 1% rise in interest rates will cost the Fed Govt (taxpayer) $270,000,000,000. The Federal Reserve will keep interest rates low because otherwise, the Federal deficit, already an astounding amount to contemplate, will increase astronomically. Why do we think the Fed Govt can continue to borrow without repercussions ? Anyway, to answer HappyOne's question - so long as interest rates are low (for sure in the intermediate term), companies, which can borrow at the lowest rates (prime), will avail of that (essentially) no cost asset, in order to pass on to their customer, in the most profitable manner. If that means 0% financing, then it'll be available next year.
 
   / Will 0% Financing Be Around Again This Year? #32  

Fallon

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Banks and other lenders cannot offer 0% financing because they would lose money. A manufacturer can do so because they can absorb the costs and still make a profit on the sale.
They usually give a $1-2k cash discount. So the finance charges are baked into the base price from the start. Basically it's a shell game & they are still making the money.
 
   / Will 0% Financing Be Around Again This Year? #33  

Herness

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They usually give a $1-2k cash discount. So the finance charges are baked into the base price from the start. Basically it's a shell game & they are still making the money.
100%. I tried both financing and loans and the second option is more for me. Last time i took a loan from Norskrefinansiering.no and had 0 troubles with it. The whole application process was also fast and easy without too much hustle and extra documents needed.
 
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   / Will 0% Financing Be Around Again This Year? #34  

Torvy

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Banks and other lenders cannot offer 0% financing because they would lose money. A manufacturer can do so because they can absorb the costs and still make a profit on the sale.
Not at all true, sort of. The bank offers some people 0% because they have great credit and balance the risk portfolio. Basically, the government forces lenders to lend deeper (to people with worse credit) than most banks wish. The government also regulates how much total risk banks can carry on the books. The only way for banks to do that is to offer 0% to people with great credit. A simplified version would be say the bank loans $5M to people with an average of 500 credit score, maybe those are at 15% (or whatever). Feds would not be happy, too risky. So, the bank also has another $5M loaned to people with 800 scores at zero. From a risk standpoint, the $10M with average of 650 score appeased the Feds and the bank can package some of the various loans on the secondary market and make a profit. These numbers are made up and it is much more complicated, but banks absolutely make money on zero %, just not on a loan for loan basis, it is all about bundling portfolios.
 
 
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