Interest-Free Financing Deals: How Different Labels Impact Consumers’ Preferences For Pre- Versus Postpayment

Johannes C. Bauer, University of St. Gallen, Switzerland
Vicki G. Morwitz, New York University, USA
Research has shown that people prefer to prepay for certain products even if there were no financing charges. We demonstrate that labeling an interest-free financing offer as a 0% APR special financing promotion can increase consumers’ demand for credit and that this “labeling” effect is particularly strong for experiential goods.
[ to cite ]:
Johannes C. Bauer and Vicki G. Morwitz (2015) ,"Interest-Free Financing Deals: How Different Labels Impact Consumers’ Preferences For Pre- Versus Postpayment", in NA - Advances in Consumer Research Volume 43, eds. Kristin Diehl and Carolyn Yoon, Duluth, MN : Association for Consumer Research, Pages: 776-776.