I really love good advertisement. There is no such thing as a free lunch. Manufactures determine the default percentage rate on financed cars, trucks, tractors, etc. They then determine what it would cost to self Finance or have a underwriter finance per one thousand dollars.
They then factor in the default rate, company established finance rate and projected profit margin and price items accordingly.
The manufacture then lures customers by saying, z�ero Percent Financing? Sign on the dotted line and we will sell you a $40,000 dollar unit, finance it for you for four years and you pay no interest. Come on now. The manufacture cannot stay in business by giving his products or money away. When we purchase something with a zero percent loan, the total cost, financing included is front end loaded. I am not referring to the loader on a tractor either.
Each year as the variables used by a manufacture, loan defaults, material and other costs change, prices are adjusted accordingly to insure the manufacture continues to meet the monetary growth percentage goals established by the Board of Directors.
Each year when asked about price increased dealers then respond with, steel Prices or new Emission Standards or CAFE Standards Changed? etc.
I long for a return to the good Ole Days of no zero percent financing gimmicks. When one made a purchase they were charged a reasonable finance rate, the economy was strong, the middle class was making a decent living wage and unemployment was at a manageable number.
I will venture to say the CEO who figured out how to market zero percent sales is still receiving a substantial yearly bonus.
I immediately walk away from making a purchase when told, "CASH PRICE SAME AS FINANCED".
