In the window replacement business, as in the greater home improvement market, financing offers abound.
Here are some examples:
- Four year, no interest loans!
- Twelve months no interest and no payments!
In the aftermath of the banking crises and the Great Recession, I am sure we all understand that money is never put to use without compensation. So who is paying the interest? You are!
If we were to offer this financing in the manner most commonly practiced, we would increase our pricing 5% to 20% depending on how long and the terms of the financing. This would cover the upfront fees we would pay to the financial institutions that make the financing available. Thus, when you accept these deals, you are paying a finance charge in the form of inflated pricing, the bank is receiving its interest at the start of the loan, and window retailer is earning the same margin. We don’t believe this approach offers the greatest transparency or the most cost effective financing. Thus, we will not offer financing as one of our sales tools.
Now putting my capitalist hat on, there is nothing immoral, unethical, or illegal about such financing. The financial institutions are in the business of making money, just like all of us. We simply believe it is important to remember that money isn’t free.