0% Finance Costs Explained: Unlock Maximum Sales Without Breaking the Bank
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0% Finance Costs Explained: Unlock Maximum Sales Without Breaking the Bank
Ever wondered how those irresistible 0% finance deals actually work?
They're a staple in UK retail – from furniture and fitness equipment to dental treatments and vocational courses – and they've been driving sales for decades.
Let's break it down, so you can maximise the commercial upside while keeping costs in check.
The Basics: It's Not Magic Money
Your customer pays 0% interest over the term.
But lenders don't work for free – the cost is covered by you via a merchant subsidy.
This is a percentage of the loan amount, deducted before you receive settlement.
Subsidy scales with the interest-free period. Here's an example:
- 12 months 0% = ~7.9% subsidy
- 24 months 0% = ~11.7% subsidy
Example: Bicycle Retailer
On a £2,000 bike sale with 24 months 0%:
Customer pays £83.33/month (interest-free).
You, the merchant, receive £1,766 after the 11.7% subsidy (£234 deducted).
Why Bother? Proven Sales Rocket Fuel
Retailers love 0% because it delivers measurable ROI:
- Boosts marketing response – Prominent 0% messaging drive more enquiries, website traffic, and footfall.
- Lifts conversion rates – Turns browsers into buyers by making purchases affordable.
Result? Higher average order values and more deals closed – especially for medium-to-high value goods like jewellery, motorbikes, bathrooms, or solar and heatpumps.
Other Alternatives: Part-Subsidised Options
Not ready for full subsidy? Go hybrid!
Products like 9.9% APR split the interest:
- Customer pays a low rate (beats most credit cards).
- You pay a smaller subsidy (e.g., 3-5%).
This helps keep offers attractive while reducing your costs.
Key Factors to Nail Your Strategy
FCA authorisation unlocks the best rates and full product range.
Benchmark competitors: Match or beat their terms to stay ahead.
Control costs with proven tactics: Tiered offers, minimum order thresholds, seasonal promotions, or blending 0% with interest-bearing.
Subsidise Less and Sell More
At FinMatch, we've spent over a decade optimising customer finance for thousands of UK merchants.
From tools and musical instruments to private healthcare and training courses – we help you implement customer finance successfully.
Ready to subsidise less and sell more?
Contact us for expert advice. Let's turn finance into your secret sales weapon!
