This is an article that was written several years ago and it touched the nerve of so many people who knew very little about how this works. However, since this financing strategy is being used at a record level again, I think it’s time to republish this article again. Additionally, there are so many young consumers who are is falling for this financing trick, they need to know this information to avoid causing financial hardship in their lives.
Over the past ten years, we have seen hundreds of companies use the zero financing strategy to move their products. I believe this financing method may have started with buying cars. Since it was such a big hit, every company started to use it in some form or another.
In the past seven to ten years, the credit card corporations started to use the same strategy, after they had discovered how profitable it is to their bottom line figures.
It appears to be such a great deal for the consumer, you just can’t pass it up. I’m sure many of you have purchased a merchandise using the zero financing deal yourselves. I know so because I have done so more than once myself. However, the part that I did not know, or to be truthful, the section where I did not read the fine print carefully and that they have a sucker punch in the end.
Depending on the company, this expiration date on these special financing terms can range from as little as six months and up to three years. However, depending on the size of the transaction, these zero percent offers can be up to five years to repay the loan.
These deals carry a special category called the ACCRUE INTEREST calculator. All this means is that it is mandatory you pay the TOTAL AMOUNT of the loan by the expiration date. The fine print on these deals is that regular interest rates on these contracts are the highest that the company can legally charge you. They are by no means ‘zero percent’ if you fail to pay by their promotional period. These hidden interest rates most likely are up to the rates of 25 to 29.9 %. In having the rates this high, you will take forever to pay off this loan.
You may say to yourself, how does this relate to me as my offer is zero-free. This is where the SUCKER PUNCH kicks in. If you fail to pay the ( entire loan balance) by the expiration date, the company will be allowed to charge you the hidden accumulated accrued interest amount. For example, if you purchased something for $ 1000, your accumulated interest charge will be very close to $ 300. ( interest at 29.9% ) This interest rate charge of $ 300 will be charged to your account even if you had paid $ 999 by the expiration date. In the end, your purchase of $ 1000 will now become $ 1300. As you can easily see, this is where the company makes their enormous profits from these types of contracts. If you knew this information up front, you probably would not have purchased their merchandise.
The companies know that the average person easily forgets about the expiration date of their zero financing terms after they have received this credit offer. As a result, they end up paying much more than they had intended for that particular merchandise.
This situation happened to me and I was not a happy camper by no means. When I started looking deeper into how these contracts work, I promised myself that I was going to alert others so that they would not fall into the same trap. This is why I call this a SUCKER PUNCH feature.
In closing, do not enter into one of these contracts unless you have some assurance that you will be able to pay this loan off sooner rather than later. Additionally, make sure you pay the loan off COMPLETELY before the expiration date. If you don’t have the funds to pay off this ‘ zero percent offer ‘, before the expiration date, try to borrow the funds from a family member if you can. It is imperative that you pay off this bill or you will be hit with this SUCKER PUNCH.