My experience is that the dealer is paid up front by the finance company who make their money out of you if you go outside the interest free period without paying the money back in full.
Just wondering if anyone knows how much these deals cost a jeweller on a c 5K watch?
Am thinking about buying a new JLC from David Robinson and I know they do 0% on it but would prefer to pay upfront and negotiate a discount instead. Would be useful to know what the figures are...
Thanks in advance
Tom :)
My experience is that the dealer is paid up front by the finance company who make their money out of you if you go outside the interest free period without paying the money back in full.
I bookmarked this Tom from an earlier thread.
0% APR Subsidy 12 24 36 48 Month Loan
Subsidy as a % 10.2% 13.7% 22.7% 22.7%
Subsidy/£1000 £102 £137 £227 £227
from an undisclosed source
oh and the dealer gets charged upfront by the finance company so if customer settles dealer does not get a rebate. If someone is offering 0% then they are unlikely to offer a discount because by law they would have to honour the 0% as well. It is illegal to offer a different price for finance as that means you are hiding interest charges.
The dealer doesn't loan his own money. Most 0% sold through watch shops is either household bank (HFC) or Hitachi Capital.
That is massively helpful, cheers Steve.
I expect that interest rates will go up after I've paid the deposit so it'll give me even more leverage ;)
Originally Posted by burnsey66
Good old cash is the winner, if you havent got the cash then maybe you shouldnt be buying the watch
I think the op wants to pay cash but is planning on using not taking the interest free as a bargaining tool.
If you can't get the discount then take the interest free and get what little I interest you can on your savings.....
Correct :)Originally Posted by Captain Morgan
Tbh if I'm not offered a suitable discount I'll be taking my business elsewhere anyway.
What he said ^^^
If they offer you a discount for not taking interest free then it's not interest free and they [the retailer] can get into a whole world of trouble.
What they can do is throw in freebies, such as accessories or a free service. That way they are not affecting the price of the watch.
OK first of all there is no such thing as interest free, no one lends free money.
Small or medium size retailers tend to use a finance company to fund their 'interest free' offers.
So say the watch is £1200, you sign a finance agreement to pay £100 a month for 12 months and the finance company pay the dealer, say, £1120 on day one.
The dealer gets a discounted finance rate from the finance company for a number of reasons:-
1. With a normal finance deal where interest is charged to the customer the retailer would normally get a commission for introducing the customer to the finance company, on an 'interest free deal' the retailer will normally forgo this commission.
2. Often a large deposit is required and people who stump up a large deposit are generally more likely to be more credit worthy so the bad debt is less.
3. The finance company charges people who do not precisely comply with the rules of the loan large penalties.
4. The finance company has all of it's interest on day one because it never actually advances the full amount to the retailer as it deducts all the interest from the advance.
5. Offering an interest free deal generates additional business for the finance company.
Large chains often have their own in house finance company and they will package up hundreds of 'interest free' agreements and sell them to a block discounting house. This gets a bit complicated.
The bottom line is that offering 'interest free' deals costs the retailer money and if you don't take an interest free offer you should be able to negotiate a bigger discount.
Overall, offering interest free probably costs a medium to large retailer around 6% compared to a cash deal.
london lad is bang on, generally it's 6%, on "buy now pay later" deals, there is generally a massive hike if you go over the interest free period, i.e you end up paying double, if you dont clear the balance. During the interest free period you have to pay the money whenever you want, the finance company wont chase you, hoping that you dont cover the total price, then they can sting you.
The finance company will also offer the retailer a 2 or 3 year interest bearing option that costs the seller less. essentially you are taking out a bank loan via the seller.
6% overall, over what time frame? Some deals are 12 months - but others stretch to 3 years.
I have no problem buying a watch on 0% if it is a good deal - I can always pay cash for other items and offset.
While there are a number of members on here that could buy any watch they wanted for cash a lot couldn't!
Theoretically, if I could be a nice 16600 SD Comex on 0% I'd have my name done for it tomorrow - nut probably wouldn't be prepared to offload a huge part of my collection in a very short time period to achieve it. 0% allows the buyer to buy now and sort out other things later.
If it saves you money it is worth it!
It's just a matter of time...
most bnpl deals are 12 months only, that'll cost me as a seller 6%. If you go over a longer period as 3 years it'll be interest bearing and i'll pay 3-4%, it's an incentive to the retailer to get people locked in to longer term loans.
Here we seem to be talking about "buy now pay later" which may have an interest free period but you'll pay interest if you don't pay up in full at the end of the interest free option period. Always good to check the small print to see if it's BNPL or just interest free over an entire fixed period eg 36 months.Originally Posted by Mowgli
Yes best to check the small print.
I bought my first Rolex interest free and I wouldn't have bought one otherwise - I've owned over 50 Rolex since then and mostly paid cash / rarely traded for them. Still wouldn't say no to a good 0% deal if it was on the table though.
It's just a matter of time...
So in theory I could go into Goldsmiths and negotiate the usual 10-15% discount and then ask for 0% finance at the end and they would have to agree? In the past they have offered me discounts but never in conjunction with finance.
Originally Posted by Danstone
I would of thought it will be difficult to get a discount and 0% finance, but you never know....
I am about to buy my next watch and for the last 2 weeks i have been into lots of different AD's trying things on. Every single one of them has offered a discount on a straight buy and every single one has said that they will not discount on a 0% purchase, full rrp only.
As you would expect.
If you have a Signet shareholder card, they will give you your 10% discount and the 0% over (I think) 24 months.
If the dealer offers you a discount for cash then refuses the IFC they are breaking the law, simple as that.
And it costs retailers a lot more than 6% on the longer term deals. Most larger retailers fund it by price positioning the product for at least 28 days prior, ie no doubt they end a 30% off sale and replace in a month later with IFC.
Finance deals help you spread payments, they aren't bargaining tools really. They are used by retailers to both upsell and gain customers than otherwise couldn't afford the product up front
Dont be so judgemental!Originally Posted by 100thmonkey
If you find one that offers discount and 0% good for you. I bet you won't.Originally Posted by Daveya.
Agreed.Originally Posted by 100thmonkey
Sorry but most of that is nonsense, especially in relation to quality watch sales.Originally Posted by Daveya.
I got 15% cash back via quidco @ Goldsmiths plus 3 years 0% on a Speedmaster!
Found this old thread when looking in to this myself.
I'm currently looking at negotiating potential discounts with an ad that offers up to 4 yrs IFC with min10% deposit, so pretty generous terms.
According to the discussion I've had with them so far, they say it costs them c7% on a 12 month IFC deal. This ties in roughly with the 6% figure mentioned in this old thread. Does anyone have any info on how much it costs the dealer to offer IFC over 4 years? I'm guessing it must be iro of 15-20% but would be really useful info to get info from someone in the know.
I did ask this directly to the ad but they declined to answer!
Recently worked for a retailer (not watches) who got charged 8% of the total amount of finance by the finance company.
It made no difference on the value or the term, but the higher the deposit meant the lower they paid the finance company.
Sent from my VOG-L29 using Tapatalk
Given you appear to be screwing them to the floor on a deal AND chasing interest free credit it’s hardly surprising they are declining to answer.
When you look long into an abyss, the abyss looks long into you.........
I'm not. I'm trying to get an idea of what providing the finance costs them as an alternative to a discount...
In this case, there's also a part exchange thrown in to the mix to complicate things.
The overall deal on the table still works out a fair chunk more than selling mine at fair value and buying new in the grey market, so there's no danger of them being screwed to the floor😀. They also threw in 12 months IFC on the balance, but Were reluctant to provide anything longer term, which gave the impression it would cost them more to go long term ie 4 yrs. They volunteered the 7% figure, during a friendly chat, which made me think about the value of the longer term finance to them.
Doing a p/X with the ad is obviously far less hassle, I just have to work out how much more I am happy to pay for the convenience, in arriving at a fair deal.
given the changing in payment regulations meaning it should be the same via cash, debit/credit card this does muddy the waters.
I have never asked for a discount and IFC I take the view it’s one or the other but I can understand retailers must have to be more careful now.
I had been told by a medium size firm that 4years IFC via Hitachi costs about 10% I assume V12 finance is about similar. Those are the two most popular providers
True, but if you’ve got the cash then I still think interest free is sometimes the better option. I could have bought my recent purchase (Tudor Blackbay) outright quite comfortably, but the dealer wouldn’t budge on the price for an upfront purchase and was offering 24 months interest fee. In this case, the best option has got to be to take the finance.
Lots do though.
I've bought a good few watches over the years on IFC that have also been in sales, from Beaverbrooks, Ernest & Jones, Fraser Hart etc. over the years - some might not always offer IFC, but from time to time is available as well at a hugely discounted price.
It's just a matter of time...