ELI5-How do banks make money when they offer 0% financing on vehicles?
In: Economics
It usually isn’t purely 0%. There’s some kind of catch.
It’s 0% for a brief period (after which the interest rate is *higher* than usual). Or it’s 0% with a huge down payment (allowing the bank to invest it immediately and make money off it). Or its 0% financing on only part of the loan (maybe it’s the first $10k, and the rest has a higher rate)
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