LAST week we shared the results of a consumer survey associated with the hire-purchase industry.
Consumer concerns ranged from insurance payment disclosed after deposit was made, poor customer service, hidden charges, high repairing costs, warranty is not worth the amount paid, defective items to products not repaired on time etc. This week we will continue with the consumer survey results.
According to the survey, 39 per cent of consumers stated that given their experiences with hire-purchase companies, they restrained themselves from buying on hire-purchase.
However, 61 per cent of the consumers stated that after knowing how the hire-purchase system works, and having bought goods on hire-purchase already, they would still buy goods on hire-purchase.
Eighty-one per cent of the consumers reported that they trusted their supplier to be fair. And 64 per cent never thought that they had been dealt with unfairly in a transaction while 79 per cent of the consumers who bought goods on hire-purchase listed financial constraints as the leading reason for them to buy goods on hire-purchase rather than cash.
Of this, 19 per cent stated that hire-purchase either looked an attractive system or was a good way to avoid spending a lot of money while 82 per cent of the consumers had no access to any other source of funds which they could utilise to purchase goods on a cash basis.
Eighty-seven per cent of the consumers are also not members of any contributory financial system which they could rely on for cash purchases.
Overall, approximately two-thirds (65 per cent) of the consumers stated that more information is needed for consumers to make decisions on hire-purchase.
The prominent areas in which consumers considered more information was needed before they made their hire-purchase decisions are grouped into clusters of related areas. These were:
* Documentation fee, and administration fee — all these should be explained.
* Advice on calculation of interest before buying the good instead of during the payment period.
* All charges should be displayed.
* All extra charges, including how they are calculated, should be explained in detail.
* All hidden charges, all the extra charges that are added to the cash price of the item to be disclosed.
* Deductions that are included in the installments.
Calculation of all financial sums — like payments, final prices, insurance, warranty, etc., in simple terms.
* Freight charges for goods sent to outer islands.
Insurance, its purpose, formula, benefits and replacement conditions.
* Consumers should be given time to read terms and conditions of agreement.
* Terms and conditions need to be explained in own language.
* iTaukei and Hindi translations of conditions and agreement.
* Terms and conditions to be simplified (hard terms are difficult for lay people to understand).
* Sales reps to take their time while explaining conditions.
* Differences in amounts to be paid between cash and hire-purchase transactions.
* Right of a consumer on repairs of goods before completing the payments.
* Consumer rights on the item.
Percentage of their salary/wages that would be going for hire-purchase payments, and credit limits.
* Make of items to purchase, and durability.
* Product details, and details of products from different countries especially China.
As a smart consumer, you must always ask the salesperson to tell you all the fees and charges over the full repayment period.
They should give you a single, total dollar amount of what it will cost you. Avoid taking on several items on hire-purchase at once. It can be hard to pay several debts at the same time. And there's more risk of not paying the full amount and being hit with high interest rate or losing the item through repossession.
* This is a regular contribution from the Consumer Council of Fiji.