Quote:
Originally Posted by photon
http://en.wikipedia.org/wiki/Psychological_pricing
Not the exact same thing but I think it's the same phenomenon.
It's not so much as people thinking they have smaller payments, it's that the psychological impact of $199 bi-weekly is smaller than $431 monthly so when making a decision the $199 hurdle is mentally easier to overcome.
And as you say, all advertised pricing is to get people into the store where the real price is different (if nothing else because GST wasn't included or whatever).
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Bingo. Unfortunately though, it is now the way it is, and it won't be changing. Once one guy is using it to his advantage, everyone else has to so the playing field is level. However I do a lot of my stuff semi-monthly, as for whatever reason, my brain just handles splitting up the payments a little better for whatever reason. I find it easier to manage. I even remit my credit card payments on the 15th and 30th. It just seems to keep your spending in check better.
Personally, I give my clients both options though. Our client base is around 80%+ college/university educated, and they will call you right out on it. Some dealers like to play games, especially sub-prime specialists that 'guarantee approvals' (yeah right, $10k for a miled out Cobalt they paid $2k for with a low down payment of only $2500).
But even a lot of professionals are paid bi-weekly, and they prefer the payment to fall on payday, where as the 15th/30th payday guy, usually just opts for monthly.