There are many businesses using “0% financing” to enhance their business model and the bargain to the customer appears to be legit. The cost is hidden in the deal between the business and the lender. And the result is that the price is higher than it could have been if customers just paid up front, but the business may set up the pricing such that there is no way for avg customer to access that lower cost.
I’ve seen cars, appliances, furniture, etc. sales all constructed this way.
WH
Yeah, I’ve seen this with a furniture store I bought a lot of furniture from, and they offered me a 0% interest financing. Upon inquiring for the details, it was set up through Synchrony. I’m sure the furniture store pays the bank a fee. For example, for a $5K loan, may be the store pays 10% over that loan (just a wild guess here), so the store only gets $4,500 from the bank, then the bank packags it as a 0% interest $5000 loan back to you over 3 years or something.
But there can be another upside for the bank. Depending on the fine prints on their loan to you at 0% interest, if god forbids you miss a payment to them for some reason (even if you just simply forget), they may severely punish you for it by perhaps retroactively make you pay an exorbitant interest (of 20% or more) for the whole amount minus your balance, or something like that.
I remember at the time, I opted not to do the 0% interest rate with the furniture store because I didn’t want to miss a payment by accident and be severely penalized for it. I chose to pay the whole balance with my credit card so I could get 2% back from my credit card company because I had the money to pay for the whole thing anyway.
But @WhiteHat is right, I wish the store would have offered me a discount on my purchase some other way if I chose not to do the 0% interest promo but simply pay up front instead. But maybe their deal with the bank forbids them to do that because otherwise, the bank would have been left out of the picture.
I didn’t even look at the fine print, but we were offered that financing deal for a mattress we purchased recently. We just put it on our card. Maybe our card will settle down in a year or so. We bought a house, moved, found a hundred things that need to be done or replaced, etc. Dog needed $urgery, cars needed unexpected maint, etc etc. We haven’t even begun the big tickets on the house yet. “Maybe in the $pring.”
WH
He’s awesome. Beautiful dog.
The Whisper note has a late fee of “5% of the unpaid part of the scheduled periodic payment that is not received within 15 days of the date it is due”, with maximums for some states.
It appears that Whisper didn’t choose Synchrony as their credit provider. The Whisper credit application is on Allegro Credit’s site. Allegro specializes in financing for audiology, dental, and musical instruments, and Synchrony acquired them last year.
Yeah, I was set up to pay off my signia ax7 HA’s over one year through Synchrony. The cost of missing a payment in terms of interest fees seems to be high. that said, it looks like I can set up an auto payment schedule from month to month. I bought a mattress with Synchrony financing the same way, with auto pay.
I bet synchrony makes money through missed payments and through fees to the dealer. I wonder if 1% wouldn’t make it worthwhile to them, given enough volume. Or 5%. I just took it for what it was: and easier way to make it affordable to purchase HA’s. I did this many years ago with my first pair, through a different bank.
Well, the Whisper rep contacted me today because apparently the first contract I signed was voided. This gave me an opportunity to look it over again, and I remember that I noticed something before:
Page 1 of the “Consumer Closed End Lease” specifies that the total of payments is $3,503.88, but the Consumer Credit Application specifies a cash price of $2,960.17.
That suggests a finance charge of about 18%! I’m inquiring as to whether paying the cash price is possible.
By contrast, Apple offers a payment plan on most of its products that truly is 0%.
That box on the form might be required by consumer finance laws, but we all know that Whisper can’t be bought, only leased. The difference of $543.71 is the provider’s (audiologist’s) cut for 3 years of support, I guess.
I don’t think you are correct that the additional is for fitting and follow up. Pretty sure Happy is right on
It’s what goes to Synchrony (it’s the lease fee).
You may also want to see if paying off the “loan” early has any advantages. I think any fees for an audio specialist is included in the monthly charge as well as any other Whisper overhead.
No, Whisper pays the audiologist directly.
Both of these can be true.
This is a fascinating conversation. I’d love to go back to Whisper and insist that they allow me to pay $2960 up front and drop $543 in finance charges. Big savings.
However, I believe that the $500+ difference between total cost and financed amount is NOT a finance or interest charge. The reason for my belief is that the Whisper Subscription cover page has a section, “Return for Credit Period”, which states: “ You have 30 days from the Subscription Start date to return the Whisper system. Any payments made will be refunded EXCEPT FOR THE $500 CONSULTAtTION FITTING FEE. . .” (Caps are mine.)
Coincidentally that $500 is more or less the difference between the two. I can’t explain the $43 but it’s too small to worry about. It probably is a payment that goes either to Whisper or Allegro.
I should also note that the APR on the “Consumer Credit Application” is specifically listed as 0.0%. So for them to turn around and tack on an additional 18% finance charge would seem to be a direct violation of that stated APR.
Sounds like the $543 is the amount Whisper has set aside to pay the consulting and fitting fee for a year. So, it sounds like the Whisper provider will have $543 to draw on for a year for consulting, fitting and adjusting. Just guessing, and the truth be known I’m not a very good guesser. I never win anything. 
The lease includes support for 3 years. $543 isn’t a lot for that.
My apologies. I inadvertently left out the fact that the “consultation fitting fee” is specified at $500. My bad.
I’ve revised my post above.
Something still missing here. If the credit docs show an amount of $2960, yet the total charge after all payments are made is $3503, then the difference must be a some type of finance charge. It would seem that if that difference was for service, it would have to be identified as such.
I see what you’re saying. It’s true by definition, yet the finance charge is shown as 0%. Maybe it’s an error in the contract. The monthly price is as promised, so I’m satisfied.
