So called “Interest-Free” or “free” consumer credits, payable by credit card or check, are nothing else but the marketing trick. “Interest-free” credits are spread through the trade like a plague. They offer you furniture, household appliances, electronics or clothing as interest free. But in the reality they are everything else but not the interest free.
The explanation is very simple. The interest is already calculated in the price. They simply increase the price and put the sigh 0% interest rate for installment payment. The 0% interest sign looks very attractive and somebody can hook up very easily on that. With 0% interest the traders gets what they wants mostly – somebody’s attention. Once somebody is attracted with some product it is much easier to convert him to buyer, than the person who do not pay attention to the product.
There is the obvious proof that the interest is calculated in the installments. If you want to buy TV or furniture for cash, you will most likely get the discount. If you get the discount for cash, you can get it cheaper. If the “interest free” credit cost you more at the end, than that is not free credit at all.
Another trick that traders do is the administrative tax. They give you the monthly installments with the regular price, but the charge you with the administrative tax. The trick is that they do not mention this tax, until you make a deal.
One more trick of “free” credits is the interest for delay payments. They count on the fact that people who buy on the credit may be late with installments. Once the payment is delayed, they charge the double digit interest rate.
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