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  • Category: Miscellaneous

    How is zero percent interest beneficial for a finance providing company?

    When we buy products, we mostly opt for the EMI scheme instead of paying full cash payment. Now, the company that provides us the loan for a particular product advertises that they offer loans to customers with zero percent interest, that is, only the buying amount has to be returned. Since there is no interest, the client doesn't need to pay any additional money that is charged due to an interest applied. So, in that case, how does the finance provider benefits by this scheme of zero percent interest? Does the finance goes in loss or are they playing any trick with the customer? Anyone who knows the real funda behind it, please share it.
  • #594959
    Almost every zero percent finance provider increases the value of the product and then adds installments that compensates for the increased price. So for every installment you pay usually includes the interest rate and you end up paying more. So for every 10,000 Rs product you end up paying 10,800 Rs or more. So as you can see such zero interest plans have their own benefit, because they are getting recurring revenue through installments for product which they can buy wholesale or provide wholesale price for customer to pay mainstream price.

  • #594987
    Who will do business with NO profit? Something is better than nothing. Instead of keeping all the products in the store, it is better to push it out with a marginal profit. Such marginal profits will be included in the cost price. Thus the sale of the products increases, and also their profit due to the heavy sale of the products .

    It is purely a business tactic to sell out all the goods lying in their godown.

    No life without Sun ¤

  • #594989
    It is just public fooling stunt being carried out by marketing companies aiming at the women house holds who does not know the marketing strategy. For them what ever comes with a free tag, they are bound to buy and even convince her husband at any cost. By the way every company is in business to earn profit and not to incur any loss on any transaction. By increasing the cost price to great extent, they show mercy of zero interest and thus we are floored by the offer and even go for it. But you should compare the same product pricing with other dealer or company and that will give right picture.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease


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