Financing from AD

[robk215k]

Originally Posted by cbusjer

No free lunches... or "free" financing on Rolex watches. Cash is King. I've paid cash for every single one of my watches. That said, my jeweler and I have agreed on a price (used watches) and I might give him $500 a week until we reach the amount we agreed upon as he's independent and all cash in the door helps his bottom line.

Scenario 1. I walk into an AD and they offer no discount on a 116610LV. I plunk $8,550 down and they give me the watch.

Scenario 2. I walk into an AD and they offer no discount on a 116610LV. I ask for interest free financing for a year. They give me a CC with zero interest for a year. I pay nothing until month 11. I pay $8,550 (that has sat in the bank now for 11 months). I close the card.

How is Scenario 2 NOT FREE financing?

[Rookhawk]

Because scenario 1 is poorly negotiated in light of scenario 2. The AD pays for 0% so that is passed on to you, the consumer. A good negotiator will get a discount commensurate with the dealers 0% finance costs.

[Rookhawk]

I was given 3 options on a Hulk:

1. $8550 and 0% for a year
2. $7182 cash (15.5% off)
3. $7400 or so if I paid via CC

No fee exists that isn't passed on to the consumer. A sad truth of economics.

[Rookhawk]

FYI: what is the cost to a seller to provide 0% financing for a year on high risk, unsecured, revolving credit for someone with a 680 to 740 credit score. (roughly)

About 9.9% to 19.9% of purchase price. (e.g. GE capital, etc.)

So a Hulk at $8550 is going to cost $855 to $1710 to finance. Interestingly enough, got a dealer to sell me a second one for $6840 cash...exactly Net-net what they'd have paid the finance company for someone with moderate credit scores on unsecured, revolving debt.

[robk215k]

Originally Posted by Rookhawk

I was given 3 options on a Hulk:

1. $8550 and 0% for a year
2. $7182 cash (15.5% off)
3. $7400 or so if I paid via CC

No fee exists that isn't passed on to the consumer. A sad truth of economics.

That's for you. However if this particular AD offers ZERO discount on that watch but offers free financing then there free financing is actually free. AT THAT AD.

[robk215k]

Originally Posted by Rookhawk

FYI: what is the cost to a seller to provide 0% financing for a year on high risk, unsecured, revolving credit for someone with a 680 to 740 credit score. (roughly)

About 9.9% to 19.9% of purchase price. (e.g. GE capital, etc.)

So a Hulk at $8550 is going to cost $855 to $1710 to finance. Interestingly enough, got a dealer to sell me a second one for $6840 cash...exactly Net-net what they'd have paid the finance company for someone with moderate credit scores on unsecured, revolving debt.

The seller is using an outside bank. The bank makes nothing unless you don't pay up by the end of the 12 months. If you don't then they're making 29% from the gate. This free financing completely bypasses the AD.

[Rookhawk]

Why would you patronize any AD that offers no means for you to avoid paying their 0% finance charge overhead (by getting no further discount) whether you use their teaser rate or not?

[robk215k]

Originally Posted by Rookhawk

Why would you patronize any AD that offers no means for you to avoid paying their 0% finance charge overhead (by getting no further discount) whether you use their teaser rate or not?

Apparently we are all not as lucky as you to buy 3 Hulks in one week for 10-25% off list. What else can i say? If you have the ability to get them so cheap you should start selling regularly on here because the top sellers are still at $8,200 here. You have a good thing...run with it.

[LightOnAHill]

I'd finance it, but not because of not having the cash, but rather, if it's 0%, then I'd take the cash I'd of paid, and invest it or put it in silver or gold and let it sit while I make early payments on principle a few months before the end of the loan.

[Rookhawk]

Originally Posted by robk215k

Apparently we are all not as lucky as you to buy 3 Hulks in one week for 10-25% off list. What else can i say? If you have the ability to get them so cheap you should start selling regularly on here because the top sellers are still at $8,200 here. You have a good thing...run with it.

You know, I've offered to bring people to my AD, facilitate the negotiation and consummate the deal for $500 but no bites.

In the inverse, I offered to pay someone to do the same for me on a DSSD at a particular price but no interest was to be had.

[rr-nyc]

Originally Posted by robk215k

Scenario 1. I walk into an AD and they offer no discount on a 116610LV. I plunk $8,550 down and they give me the watch.

Scenario 2. I walk into an AD and they offer no discount on a 116610LV. I ask for interest free financing for a year. They give me a CC with zero interest for a year. I pay nothing until month 11. I pay $8,550 (that has sat in the bank now for 11 months). I close the card.

How is Scenario 2 NOT FREE financing?

Im 100% on your side but 0% financing is deferred interest, not deferred payments. You'd have to make at least minimum monthly payments with a balloon payment on month 11

[robk215k]

This is true. Minimum payment and balloon at the end.

It's still interest free if it were 12 equal payments though, right?

[rr-nyc]

Originally Posted by robk215k

This is true. Minimum payment and balloon at the end.

It's still interest free if it were 12 equal payments though, right?

Absolutely. And anyone in finance or accounting would agree that if your intent is to have your money working for you during that time, you want only want to make the minimum payments as long as possible.

[witch watch]

Originally Posted by robk215k

I have 3 or 4 credit cards with zero fees. All of them came with a period of interest free. That's their lure. Thats how the get you in. If you're smart enough to pay it off and close the card within the free period you make out and they lose. If you do NOT pay it off interest accrues from day one at a crazy rate and the bank makes tons. The amount of people who do it wrong far outweighs those who do it right. That's how they make money.

Can't for the life of me figure out why no-one else can't see what as far as i was aware that the above is common knowledge