Personal Finance

FinanceIt - How Does it Work?

  • Last Updated:
  • Aug 11th, 2021 5:03 pm
Tags:
[OP]
Newbie
Aug 9, 2021
1 posts

FinanceIt - How Does it Work?

So your seeing more of these companies pop-up and anyone look into this and know the "inside" to how these work. Basically the deal is they will provide financing for a bigger ticket item for 0% interest over a period of 12 months. I get part of where they make money is on individuals who do not pay the monthly payments in time and probably charge astronomical rates. However, is that all there is to this? Soft credit check involved as it gets approved on the spot if you apply.

I have a feeling the merchants have built in the cost of using this service into the product as well to generate volume? if yes, then if i pay in full I am being harmed because essentially I am paying for someone else's use of this financing.

My choices at this point are to take funds out of my HELOC at a low interest of Prime+0.5 or use this 12 month financing with 0% interest.

Any thoughts? Thanks in advance.
4 replies
Deal Fanatic
Apr 16, 2007
8132 posts
3470 upvotes
Financial District B…
They are just another subprime credit org that targets credit challenged individuals that can't secure credit at a main stream lender.

With that said, they are typical subprime orgs that will charge a setup fee, acquisition fees, admin fee, or whatever term they want to call it.


This is the Q&A from the dealer web portal

top right: Are my customers charged a fee? Yes
Image
----------------------------Licensed Credit Bureau member, S1, FI Automotive, CCP forums most banned = x 13 and counting, guess who that is?... stomped to the curb once again
Deal Expert
User avatar
Jan 27, 2004
50038 posts
14088 upvotes
ONTARIO
mikeymike1 wrote: They are just another subprime credit org that targets credit challenged individuals that can't secure credit at a main stream lender.

With that said, they are typical subprime orgs that will charge a setup fee, acquisition fees, admin fee, or whatever term they want to call it.


This is the Q&A from the dealer web portal

top right: Are my customers charged a fee? Yes
Image
What about the places that offer legit 0% financing with no fees? (But usually the no fee option is 6 months… the higher you go, the higher the fee).

Eg. I bought tires @ kaltire & got 0% financing for 6 months no fee. Its the same tire price for everyone, its on their site. And also competitive prices. They price match.

I got the same deal @ sleep country Canada for a mattress.
Deal Fanatic
Apr 16, 2007
8132 posts
3470 upvotes
Financial District B…
UrbanPoet wrote: What about the places that offer legit 0% financing with no fees? (But usually the no fee option is 6 months… the higher you go, the higher the fee).

Eg. I bought tires @ kaltire & got 0% financing for 6 months no fee. Its the same tire price for everyone, its on their site. And also competitive prices. They price match.

I got the same deal @ sleep country Canada for a mattress.
You will have to ask the retailer and/or lender about their fees.
Most subprime lender do charge excessive setup fees or like how FinanceIt states where their lending dealer can pay it themselves to seal their deal.

ie: You may be ok that you paid 0% and that's fine. The Tire dealer may have paid $150, $250(to the financier) etc to offer that finance option to you.
On the flip side, maybe you could have gotten that as a discount on your tires.

This is really no different than the 0% offered for auto financing. Pay full price or near full price of the car for the subsidized financing.

No one and I mean no one offers financing for nothing. They get their revenue somewhere else that you don't know about.
----------------------------Licensed Credit Bureau member, S1, FI Automotive, CCP forums most banned = x 13 and counting, guess who that is?... stomped to the curb once again
Deal Fanatic
Jan 19, 2017
7456 posts
4348 upvotes
RFDNewb8 wrote: So your seeing more of these companies pop-up and anyone look into this and know the "inside" to how these work. Basically the deal is they will provide financing for a bigger ticket item for 0% interest over a period of 12 months. I get part of where they make money is on individuals who do not pay the monthly payments in time and probably charge astronomical rates. However, is that all there is to this? Soft credit check involved as it gets approved on the spot if you apply.

I have a feeling the merchants have built in the cost of using this service into the product as well to generate volume? if yes, then if i pay in full I am being harmed because essentially I am paying for someone else's use of this financing.

My choices at this point are to take funds out of my HELOC at a low interest of Prime+0.5 or use this 12 month financing with 0% interest.

Any thoughts? Thanks in advance.
yes, the merchants pay the Fin company a fee and they have more sales.

Top