0% financing »Easy to explain: how it works



Who actually pays 0% financing?

A 0% financing is a common selling point of furniture dealers, kitchen sellers or electronics shops: finance your purchase for 0% and pay for the goods over several years. Sounds simple. But who is a zero-percent financing worth? The cost of a 0% financing is usually borne by the dealer who pays a commission to the bank. This gives him a sales pitch for customers who are unwilling to pay € 5,000 in cash for a kitchen.


What is behind a 0% financing?

A 0% financing basically means that you do not have to pay any interest on your financing. Most of the 0% financing is found at dealers or in online shops. Dealers are thus able to offer their customers the opportunity to finance goods at no extra cost and to extend the payment over several months to years and repay the purchase amount in monthly installments. This allows merchants such as furniture retailers or stores selling electronics products to increase their sales as new customer segments can be tapped. These are mostly customer segments, which finance their goods “on the spot”. But who actually pays for this funding?

How is the benefit of 0% financing distributed?


The 0% financing is mostly used by traders, who open up a new advertising opportunity with the 0% -financing. By being able to distribute the costs of a purchase of goods over several months, customers can be addressed, for whom the goods are too expensive as an invoice or cash purchase.


A second group, which benefits from 0% financing, are credit institutions. Despite the zero interest rates, banks earn through commissions and subsidies of dealers. Because: The dealer pays the bank or the bank a commission for each completed loan. In this way, the bank receives 1.) a new customer to whom it offers financing and 2.) a commission from the dealer, which roughly corresponds to the amount of interest paid by the end customer.

End customer

The biggest advantage of the end customer is the possibility to receive a product immediately and to pay for it in the future, without incurring increased costs. The costs of 0% financing are offset by the dealers who reimburse the end customer with the interest in the form of a subsidy to banks.

Can I revoke a 0% funding?

Since March 2016, the statutory right of revocation has also applied to 0% financing. Until now, there was no right of withdrawal for zero-percent financing. However, this was adjusted to protect the consumer, so now the 14-day right of withdrawal applies. This is based on a new directive introduced by the German Bundestag under the Mortgage Credit Directive.