How can companies afford to still offer 0% interest on large products/jobs.
Heard an ad for window company saying you can still get 0% interest for 24 months.
Discussion
My theory:
They just add the interest into the price and sell the debt into the financial system which ends up making money leveraging it and repackaging it into derivatives. In other words, they jack up the price a little and immediately offload the loan to someone in finance who gambles with it.
Because they arent doing the financing.
A lot of Home Improvement stuff in the US is getting 0% promo loans via GreenSky, which is currently owned by Goldman Sachs.
They bank on people not paying off the loan before the promo period expires which would saddle that consumer with a massive credit bill.
Those companies are getting long term, stable income instead of trying to find people who can afford to pay for everything up front.
Time will tell whether they'll build up enough recurring income to cover the cost of the cost of materials for next batch of customers.
It sounds risky to me. I'm glad I'm not in that business.