Why Toolbox Manufacturers Charge High Interest Rates and Mechanics Pay Them :: Finance Interest Mechanic Manufacturing

Why do tool cabinet Manufacturers Charge High Interest Rates and Mechanics are uncoerced to pay for them?The high participation rates of toolbox financing fork out hits for the manufacturingcompany and the mechanicals. The company increases their net income and themechanic receives financing, convenience and the name brand.We have all been there. We walk into the garage of our mechanics shop, taking a quick glance we see the huge elaborate toolboxes that each mechanic owns. Most of them are from Mac, Matco or Snap-On. Unless you work in the tool attention most people do not realize what the real woo of each of these boxes is.The average toolbox prices a minimum of $4,500 and buns run up to $9,500 for just one component of the set. The Big third toolbox companies in the industry are Mac, Matco and Snap-on and all are using outrageous interest rates depending on state requirements. The rates interpolate from 6.25% all the way up to 22.50% in most states.So how more does t hat toolbox really cost if a mechanic makes weekly payment for the whole term of the contract? A $4,500 dollar contract as theprinciple balance at 22.50% interest while paying $32.71 a week for 208 weeks (4 years) will cost a total amount of $6,803.68. That is everyplace $2,000.00 ininterest. face at a $9,500 dollar contract at 22.50% interest while paying $69.06 a week for 208 weeks, will cost a total amount of $14,364.48. That is almost$5,000.00 in interestLooking at this scenario from a companysperspective, there has to be a point ofcompetitiveness. Each manufacturer offers in-housefinancing for mechanics that are arouse in buyingtheir product. Due to many mechanics having little ordamaged credit, the companies are taking a financial risk by financing them. Considering that forevery 100 contracts the company buys 2 will omission on the loan. There is a 2% chance of defaulton a loan. Each company buys 300 contracts on average per day, virtually 78,000contracts annually which means that 1,500 will more than likely default. The rate of interest onthe companys part is determined by an prognosticate of how much money will be lost.If the interest income from these rates makes up approximately 35% of each companys netincome, indeed the total amount of interest income would be 37% from these contracts.1For thecompany, the benefit of bringing in a 35% net income outweighs the cost of a 2% loss of interestincome.The other point of view, the mechanics, involves troika solutions to this question.