Guide to Zero Percent Financing

2007-03-08 10:33:40

( Financial )



Companies that are selling consumer electronics and other big items, such as cars and furniture, are using zero percent financing deals to lure customers in buying their products. Such deals promise 0 percent interest on loans or installment payments for the acquisition of their goods. Before you enter into a zero percent financing deal, it would be best to consider what such arrangement really offers.

Overview

Zero percent financing is a type of loan in which no interest is paid for the whole duration of the financing. It is important to note that not all consumers are entitled to secure loan with 0 percent interest. Many merchants only offer such loans to customers who have very good credit. Sometimes 0 percent interest is also restricted to certain style, brand or model. Moreover, many buyers cannot afford to avail themselves of zero percent financing because such deals have high monthly payments, which are often only short-tem loans.

Things to do before signing up for a loan with 0 percent interest

• Plan in advance. Consider whether your current financial position will enable you to make huge monthly payments. Ensure that these monthly payouts will not hurt your budget.
• Compare offers. Make a research on the quality and the offers available in the market. Be sure to get the best price. Some merchants jack up the prices of their products to compensate for the expenses of zero percent loans.
• Carefully read the offer. Don’t forget to read the zero percent financing agreement before signing. Some sellers only make such loans available to certain products and may require you to use your credit card to obtain the loan.
• Consider the consequences of the loan. Some merchants put conditions before you can avail yourself of such deals. Be sure that you are not giving up your right to return or exchange the product that you acquired.
• Be sure to pay on time. A number of zero percent financing deals revert to exorbitant interest rates if you miss your due date.


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