DFS

[CYNthesys]

Struggling to get my head round this - Is there such a thing as an interest free loan, and, or would a secret commission be involved in this scenario?

DFS say "we give you the flexibility of having a totally interest free loan over 6, 12, 18, 24, 30, 36, 42 or 48 months"

As the interest free fixed sum loans agreements are arranged by DFS with Hitachi Capital, what is in it for Hitachi as they are not going to lend money for nothing in return.
As an example sofas costing £1440, pay nothing for first 12 months then 36 monthly payments of £40

[wales01man]

Re: DFS

wou;d think hitachi pay dfs less than dfs sell it for no other way to make their money?

[CYNthesys]

Re: DFS

Clause in Hitachi agreement says: -
5. You authorise us to pay the balance of the amount of credit to the supplier as soon as we enter into the agreement or to inform the supplier if we refuse to enter into it.

[wales01man]

Re: DFS

must be balance after they take out their share ,this way DFS get the money right away even before furniture is made

[CYNthesys]

Re: DFS

Correct, DFS get full payment from Hitachi straight away, before the furniture is even made, but the wording still seems misleading as DFS contract says balance due from finance company £1440

[enaid]

Re: DFS

They probably don't hold a CCA so would have to use a finance company

[CYNthesys]

Re: DFS

enaid, even if they dont hold a cca, DFS's contract shows the cost payable by the customer and from the finance company as being the same amount. This suggests to me that Hitachi gets a backhander

[enaid]

Re: DFS

Well I don't think they would be breaking any laws if they charged you £1440 for the suit, they were happy with £1000 and then gave Hitachi £440 for lending you the money and taking the risks in doing so. So I don't see it as a backhander a such just business.

[CYNthesys]

Re: DFS

but surely any such payment should be disclosed?

[CYNthesys]

Re: DFS

pt2537

Am I way off track on this
please let me know

[wales01man]

Re: DFS

as most companies operate with borrowed money should the say what percentage of the money on each sale goes to repay the debt or what percentage goes to anyone?

[CYNthesys]

Re: DFS

Ive done a bit of digging, and it appears that DFS are unwilling to reduce their prices for customers wanting to pay cash, so if cash price and credit price are the same there must be an incentive for someone along the line

[CYNthesys]

Re: DFS

Found a similar query on MSE posted last month
Clearest explanation describes it as a blind discounting, whereby the retailer accepts a reduced amount from the lender.
Surely this is just another name for A SECRET COMMISSION ?
Ive only been able to find this definition of a blind discount -

A blind discount is the cost difference between the listed cash price for a car or other equipment and the reduced financed amount or a lower interest rate.(noun)An example of blind discount is a used car listed for $12,000 cash while the leasing contract is written as $10,500.

[CYNthesys]

Re: DFS

Found this on Hitachi Capital website

Interest Free Credit

Interest Free Credit is promotionally strong and will help attract customers to your store. This type of finance product is primarily used in the jewellery and furniture sectors but can be applied to many other industries.
Close all | Open all
How it works for the customer

• 0% APR which means there’s no interest to pay
• Equal monthly repayments
• The customer may settle their agreement at any point
• The customers’ first payment will be approximately 1 month after the delivery of their goods/services.

How it works for you (the retailer)

• We offer a range of payment terms for Interest Free Credit on purchases priced between £300 and £25,000.
• A subsidy will be charged for offering this type of finance product.

[wales01man]

Re: DFS

A subsidy must be jargon for their cut how much who knows ?