The Cost of Zero Percent Financing

These days, zero percent financing “deals” can be found on everything from trucks to TVs. But it’s important to read the fine print. According to a story in the _Minneapolis-St. Paul Star Tribune_, the prices on some such items are often inflated to help retailers make up for lost financing charges. Or, they come with severe penalties for not paying attention and following all the rules. For example, the zero percent rate on a big-screen TV might be valid for 12 months, but if the buyer takes longer to pay it off, that rate could jump to 25 percent–and not just on the remaining balance, but on the total purchase price.
h3(matt). Matt’s View
p(matt). Besides paying close attention to the fine print, zero percent financing deals only make sense when we have the total cost of the item in savings. Otherwise we’re presuming we’ll be able to come up with the money down the road, and the road to consumer debt is paved with such presumptions.

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