This is off topic, but I figure there must be some readers in this group that
can answer my question.
How do they do it? There's a furniture outlet (Levins') that is advertising a
sale with no money down, no interest, no payments until 2007. How do they do
this?
I've heard that on some of these deals that advertise "No Interest until 2007"
have you pay just the principle. The interest accumulates and is due in one
lump sum when the time comes.
But if the ad is correct for this furniture sale, no money exchanges hands for
three years.
What's in the fine print? What's the gimmick?
BTW, La-Z-Boy is offering the same sale.

TOM KAN PA ) wrote:
: This is off topic, but I figure there must be some readers in this group that
: can answer my question.
: How do they do it? There's a furniture outlet (Levins') that is advertising a
: sale with no money down, no interest, no payments until 2007. How do they do
: this?
: I've heard that on some of these deals that advertise "No Interest until 2007"
: have you pay just the principle. The interest accumulates and is due in one
: lump sum when the time comes.
: But if the ad is correct for this furniture sale, no money exchanges hands for
: three years.
: What's in the fine print? What's the gimmick?
: BTW, La-Z-Boy is offering the same sale.
:

There is always someone willing to buy a future obligation at a discount.
The gimmick is that you get no discount off the full retail price of the
stuff you buy. So let's say it costs the store $1000 plus 10% average
freight from the manufacturer. Full retail is what they call "number plus
ten" which is double cost plus 10%. So the full retail price for $1000
cost is $2200. But most retailers are content to make what they call "40
percent landed" which is cost plus actual freight plus 40%. So the store
is happy to sell $1000 at cost for $1540. What comes into play now is the
time value of money. So, you could buy it for $1540 and finance it at
current rates for 3 years or you can go in and take this "deal" -- when
you take the deal you sign a note, just as you would if you were to
finance it, and the store sells the note to a credit company.

It's just a game played using the time value of money. You're not getting
anything for free.

--
Bill

reply to sirwill1 AT same domain as above