Advertisements for no interest, no money down, and no payments for a specified a

Question

Advertisements for no interest, no money down, and no payments for a specified amount of time are all around us. Consumers are drawn to these deals because, on the surface, they appear to offer an advantage and provide financial relief for a specified amount of time.

What are some positive and negative factors surrounding this type of financing? How does interest factor into the overall equation?

Your initial posting should be 250-500 words and must be submitted by midnight Thursdayof this week.
By Sunday of this week, respond to two or more of your classmates in one of their postings in any of the following ways:

Explanation / Answer

Financial services firms offering loans at no down payment, no/ low interest rates and delayed repayments are attractive to the consumers. Such offers have their own advantages and disadvantages:

Positive factors:

Negative factors

In the overall equation, interest rates play an important role. Lenders would sell large volume of loan products by attracting consumers with no interest. Once the consumers have signed up, the financier would charge interest rates that will be higher than the market average due to the high risk profile of the borrower. This way, the financier would make profits.

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