Are there risks to merchants on 0% installments?

[technophobic]

There are several misconception about 0%.

Merchant shouldered the interest for the customer on the installment basis. In effect the customer get it at 0%. Merchant actually give discount on cash because they earn more.

Electronics usually have only 8% margin. konti lang ang kita ng mga electronic stores. They usually get support from the distibutor to share the 0%. 6 months from the merchant 6 months from the distributor. so in effect they are only earning 2%. Thats why there are some merchant willing to give discounts. Clothes on the other hand have really big margins that can go more than 100%

Now the distributor you mention on Timog area was able to give bigger discount because they are also distributor, merchants can't compete to them.

[technophobic]

And no the retail price don't jack up. The distributor usually give out the standard retail price. But they usually sell lower, since distributor only support the SRP they have to follow that price to avail for support on 0%. in a way customer should be happy because the merchant give discounts already.

[CVT]

I availed of a 12-month 0% interest on an electronic item last year.

I asked the store how much it would be if I pay in cash. They told me it would be the same (amount).

I guess if you're buying from the same store, you won't get a discount. So, you have to go to the distributor(?) or somewhere else to get it....

2001:weathermanf2:

[Galactus]

I don't think 8% lang ang mark-up sa electronics. Over at pinoydvd.com, may mga retailers na willing to give 20% discount for CASH buyers sa 32" LCD TV's. May group buy nga dun, gusto ko sanang sumali, kaya lang kulang pa cash, and they plan to buy na this weekend. (Displays, Flat Panels thread)

My friend works at Canon Marketing, and he'll be the first to admit na retailers are making a killing on their products, kasi malaki nga mark-up nila, especially on their digital cameras and photocopiers.

[technophobic]

In a retail store products iPod, Palm and Canon P&S digital cam usually only have 8%. Canon sometimes give 10 to 12% and thats it. However for LCD TV i really say how much, I haven't deal with Home entertainment products.

Cellphones actually have lower margins in average. Merchant can't afford to stock up on cellphones because they depreciate very fast.

And don't forget the grey market. Grey market usually give lower price as they don't have problem like the local taxes. So most merchant are having difficulty in competing with grey market.

[technophobic]

Now if you can ask your friend how much margin canon is giving the retailer it will be better and whom they are giving it to, so we can demand the same price point :D

[empy]

There are several misconception about 0%.

Merchant shouldered the interest for the customer on the installment basis. In effect the customer get it at 0%. Merchant actually give discount on cash because they earn more.

if that is the case, then that is a manufacturer or retailer incentive program - one that cc companies have nothing to do with. kinda like how Mazda offers the 3 with zero interest.

now i'm confused. ano dun sa dalawa pinag uusapan natin? :confused:

[mazdamazda]

2. There's no such thing as 0%. It's all a lie. Interests are already factored in. Consider, you can get discounts on cash but not on card.

Why is it that when I purchased a Whirpool refrigerator a few months ago, I was able to get it for 6 months to pay for 0% and less 3% off the retail price? When I inquired if I will pay in cash instead, they said that I had to pay for the full retail price?

Bankard has even upped the ante by offering 2 more year of additional warranty on top of all 0% interest appliance transactions charged to them.

[nicolodeon]

Interesting articles:

There's No Such Thing as a "Free Lunch" Loan
Buy Now, Regret Later
Credit Card FAQs
Beware! Zero Percent Interest Can Cost More than you Think
Annual Percentage Rate (APR) Explained

[j_avonni]

Zero % is not true. The retail price is jack up para they can absorbed the interest. Gusto ng mga CC co. yan kasi by % ang commission nila. Bigger the amount syempre mas gusto nila. Pero diba jung ayaw mong mapamahal ipon muna. Kasi kung gagamitin mo yong pera nila imposimple na walang interest yon.

Yeah! There's no such thing as 0%. Ano loko, magpautang ka ng walang interest or gain on the part of the creditor. They just made it appear na 0%. Pang come-on lang ito.

BTW, yung laptop ko 2 payments na lang fully paid na. Uutang na naman!

[///MPower]

Yeah! There's no such thing as 0%.

There is, granted you can make the payments on time. If you're bad at that, then it's in your best interests to stay away from these loans, since it's people that DON'T pay on time (and subsequently get f'd in the a by gigantic APR's) that subsidize the 0% loan for those that do, and get 0%.

However, CC's that offer 0% APR for, say, a year are pretty much standard practice in the US. There's no risk unless, as I said, you don't intend on making payments on time. With autopay and other electronic measures, that's really not very difficult to accomplish these days.

[wildthing]

to answer boybi's question - NO, they don't have risk.

OT
in the point of view of a seller (although I don't deal with electronics pero I have the hand in pricing the goods we sell), we can really manipulate how much the SRP would be.

we import our goods and give a "transfer" price to our distributor that is much, much lower (obviously) than SRP. AND if the distributor sells more, we also give them another discount which we call REBATE (given only after hitting a certain volume of sale). We can further ofter a discount if they pay cash or at a lesser term (we call Term discount). If this is all factored in - it is anywhere between 30 to 100% of the SRP (depending on product)!

As such the Distributor can always go lower (if they chose to) than the SRP if one pays them cash. But the merchant (o dealer or retailer) will not be able to offer that (unless they are also given the same term discount by the distributor).

So it's a matter of strategizing the SRP pero at the end of the day the gross profit (GP) of the distributor is almost always fix, merchant always variable, importer always fix (unless he is also a merchant or nagreretail siya - he will have a very high profit).