Comments on: The truth about Zero % Finance

By: admin

admin — Mon, 01 Jun 2009 06:40:21 +0000

T2, thanks very much for your comments which we are happy to publish in full. You are right this article was written by a contributor quite some time ago and has been on the site since day one. It’s safe to say that our site has been through many changes since then and this particular article may not represent life at the “sharp end” as it where. It’s interesting that with the ebb and flow of the internet this article is picking up some renewed debate so long after it was originally published but we are obviously aware that it is on the “front page”. We think that people reading the original article and subsequent comments should be able to make up their own minds about “zero percent”. As we have stated the original motivation was the concept that “no one lends money for free” which we stand by but are willing to accept that, in fairness, this article does not represent how things may be done now. Thanks again for your contribution.

By: T2

T2 — Sun, 31 May 2009 21:34:04 +0000

I dont think Saddler is missing the point at all actually. I am also in the motor trade at the sharp end and I also feel that this is a very misleading article. Just for starters you intimate within this article that the customer can get a better deal if they do not take interest free credit against a new car. That is total rubbish. Tell me something ??? If a manufacturer offers say a free servicing offer then can the dealer also cash it in instead of passing the offer to the consumer? No they cannot and the same applies to an interest free credit offer. The manufacturer puts up the money and it is up to the customer to take it or not. I can assure you it is not passed on to the dealer instead to do with what he pleases. I agree the dealer will make no finance commision on a 0% offer unless the customer takes add ons but any dealer who lives only on finance commision is playing a dangerous game with regards to his long term survival. As you should know finance commision can be clawed back at any time what with early settlements etc. Any sensible dealer today treats finance commision only as a bonus and not as a certainty. He will not factor it in to a deal because he cannot be guaranteed to keep it. After all the customer may not even choose to take the dealer finance in the first place so it is impossible to factor it in beforehand. If a dealer has to pay a “subsidy” on an interest free offer nowadays it is a token amount which is in most cases no more than £100 and in many cases much less so in the grand scheme of things it is irrelevant to the over all deal the customer recieves. I myself have been selling cars for nearly 25 years and I must agree with Saddler that to me it seems that the author of this article has been out of the sharp end for a very long time. I can see the points made being relevant in relation to the motor trade of say 15 years ago or more but it bears no relation to how it is done today. Dealers have nothing like the margins they had in the old days so there is no way they would be able to subsidise such offers today as described in this article. I have no issues in sites like this giving postive and constructive advice to consumers because at the end of the day it actually can make the likes of my job much easier. However I must state that this particular article is a very misguided piece of writing and it in fact does consumers no favours at all. It just arms them with imformation that is totally wrong. I think you need to conduct some more up to date research because I also suspect you have been away from the “sharp end” for a long time if this is the standard of article you are currently producing for consumers.

Regards.

By: admin

admin — Sat, 30 May 2009 19:26:50 +0000

I think you may be missing the point. Whoever funds it, no one lends money for free…so there really is no such thing as “zero percent” in the long run….

By: Saddler

Saddler — Sat, 30 May 2009 15:19:07 +0000

Hilarously misinformed article. This may have been the case 20 years ago but now it never happens. Yes someone funds it but it is the manufacturer who does so and not the dealer. The customer either takes up the offer or he does not and in no way is the dealer able to retain the money instead. As a result the dealer cannot offer additional money if the customer does not take up the offer. If the dealer has to contribute a subsidy at all in this day and age it is a minimal token amount. The author of this article shows that it is a very long time since he operated in the motor trade if he ever did at all.

By: steve sellars

steve sellars — Wed, 18 Mar 2009 10:13:59 +0000

at last!
the penny seems to have dropped that ’0%’ finance doesn’t exist. of course it doesn’t….theres not a finance company on gods earth that will lend money for nothing anymore than a petrol station will fill your tank up for free!
in my long motor trade experience, the only people who want ’0%’ anyway are the people who dont actually need finance and would otherwise have paid cash anyway!

By: GlenS

GlenS — Wed, 14 May 2008 15:49:42 +0000

I suspect most people already new or suspected as much (no such thing as a free lunch?) but interesting nevertheless