I understand that prices drop when demand drops but how do banks make money off a 0% interest loan?
In: Economics
Dealerships and companies in general, operate for profit but NEED cash. Even a profitable business goes bankrupt (stops operating) if there isn’t the cash available to pay salaries, rents etc etc. So if a dealership is holding inventory (not cash) and has regular expenses (needs cash), it makes sense for them to take losses to convert their non-cash assets into cash just to stay in operation. Of course, this is not sustainable in the long run, but it is what businesses do in a crisis in hopes that the situation improves.
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