Q: Why don't financial institutions loan at Zero Percent?
A:
Savers in these institutions deserve a return on their savings
and it comes from interest on loans.
Q: How can vehicle companies loan (the value of the vehicle) at
Zero Percent?
A: They can't.
They simply do not negotiate a reduced value and capture the
amount which would ordinarily be collected in a low interest
loan by avoiding the reduction caused by an overpriced item or
depreciation. Some overprice the vehicle and avoid reducing the
price to the level which would require interest on the loan for
the value of the vehicle. Check out the meaning of discount
lending and notice the similarity to the current marketing
approach in the vehicle industry. If you are offered zero
percent financing, where does the seller get the value of a
return on a loan? (Ask them to
explain where they recoupe the forfeiture of
interest on the loan for the vehicle.) You may be surprised -
they may actually tell you the rest of the story? CLUE:
it comes from the buyer's
pocket. See Kelly Blue Book
article:
http://www.kbb.com/car-advice/articles/zero-percent-financing-_-financial-fact-or-fiction.