So borrowed Moto Rapido’s demo scrambler 1100 pro while my Multi’s in for a service and despite the weather was impressed with the bike so in a moment of madness and curiosity I looked up how much they are and then on to Ducati’s finance options and that’s where I stumbled over their “we do not recommend a deposit over 25%” So looking further I think I found out why......
It is common practice with lots of larger purchases, that is why they are always so keen on the purchaser taking credit, even at so called 0%.
Opposite normally on 0%, certainly in retail. Finance companies (when I worked on retail for 15yrs) would charge up to 45% of the cost depending on duration. 18m would be c15-20%. Bit cash discount ‘wasn’t allowed’
Explains why Dealers no longer like cash. Gone are the days when cash was king. They almost turn there noses up now, when you want to buy something with your own money
Which is why the we buy any car ad makes me cringe and pmsl in equal measures ‘you’ll get a better deal without px’
For this reason it makes me laugh when you hear Philip Schofield telling us we “could” get a better deal on a new car if we pay cash rather than trading in. But in reality what’ll happen is the dealer will give you say £10k for your trade in but rather than use all that as a deposit and reduce your monthly credit commitment and maybe even buy it on HP rather than PCP, they convince you to finance on PCP, pay a minimum deposit and the remainder they give back to you in cash for you to spend on upgrades and bling (a win win for them) and so that’ll be why the loan rates are up around 8% when you could get a loan yourself at the supermarket at around 3%, your paying for the dealers commission.
Think it only works where there is a limited time at 0% then they make their money after that period. My parents got some cash back from a conservatory purchase because they took the finance option - even though they had the cash - then they paid it all off before any interest was due (some loans might have penalties for that, I suppose). Mad, but I guess the companies must make money out of most - or enough - people.
They rely upon some going past the free period and paying interest. But the conservatory company will have been charged, ie retainer kept by finco
I has the same issue when I bought an iPhone from Carphone Whorehouse a few years ago. After cutting through the sales bullsh1t with a few questions it became clear that if I signed up to a 2 year contract I’d end up paying for the phone twice, so I said I’d prefer to just buy it outright. From the moment those words left my mouth, to all intents and purposes I ceased to exist as far as the sales person was concerned.
Be that the assistant would probably be on some incentive, when I purchased my Daughters first contract the assistant advised me long term if I had the money to buy the phone outright and go SIM only as it works out cheaper for the consumer. I only outright purchase phones for this reason, like with a lot of contracts for services these days they like you to forget to chase a better deal at contract end.
Been many moons since I've been involved in this side of Mobile, but the phones themselves weren't the money maker for the mobile operators, more an incentive to get you on their network (you would still pay for it of course). Sure it's much more complex than that now and I'm so out of touch I wouldn't assume that's how it is today, but the margin on the phones themselves were miniscule hence trying to nail you into a contract. Probably the contract with the operator that gave them the most commission. Once sim only entered the market, the commission/incentives were much higher to sell those than phone contracts. Check out ARPU for the 4 major operators and you'll be surprised how little they make.
Interestingly I was tempted into a finance deal on a car. £3,000 contribution to the car if I took finance out on £10k over 3 years at 10% finance which is £3k in interest (in very rough calculations) however the dealer told me I can cancel at anytime, if I did after 6 months the dealership wouldn’t have to pay the finance company back the incentive. So it cost me £500 for a £3k contribution…result Funnily enough the dealership can’t offer that deal anymore!
