Honest opinions about how to buy Appliances and Lighting.

Monday, February 01, 2010

What Happened to 0% Financing

Haven't seen much 0% financing lately, have you? Up until 2007, any consumer would qualify for a 0% financing deal for 1 full year based on simply owning a home. The majors players GE, Wells Fargo and Citibank charged the retailer and/or the manufacturer 5-6% and patiently waited for their money.

At this point, there were three favorable outcomes to these banks. First, you paid back the loan, and they earned the original 5-6%. Second outcome is you were late, in which they earned the original 5-6% plus whatever accrued interest rate built up over the year. In case you couldn't pay them back, well, they would just own your house. Typically, option one was the most common by far.

Until 2007

Then people couldn't pay back. The real estate wasn't worth the pre-bubble peaks, so foreclosure was no longer viable. So say goodbye to 0% probably forever.

Now to confuse you just a little, we are offering 0% in February, but with 12 equal payments during the year. Much less liability to the banks and now consumers can plan better monthly instead of being hit yearly.

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