Consumer Credit Facts in Retail
The washing machine is defective and must be replaced, the old computer is no longer hot, so that a powerful device is needed, and the chic TV would be in the living room certainly a visual highlight. Anyone who can pay for such new purchases from existing reserves need not worry about consumer credit and terms. But the traders lure with always attractive new financing offers. They suggest that you can afford any purchase. But what should consumers pay attention to, and what tricks do retailers like to use to increase consumption? A look behind the scenes is worthwhile, because it creates transparency and makes the decision easier.
A popular instrument for increasing sales
As a buyer, you need to know that consumer credit is a popular way to increase sales. Especially in the run-up to Christmas, but ultimately also throughout the year traders are attracting with attractive offers. Most interest rates are extremely low, low monthly rates suggest that every purchase is to finance and fits into the existing budget of the customer. Obviously it is no problem at all to buy expensive electronic devices on credit and to pay them off later on. Traders work with individual banks or even with credit platforms. Based on the individual customer data, an offer is made for each financing, the customer receives this offer on-site at the dealer and can conclude a loan agreement there. At first glance, it gets all the services from a single source. He spares himself the cumbersome credit comparison and can take the desired item immediately. For the fast-paced buyer, it looks like he’s made an attractive bargain. But does this impression stand up to a scrutiny?
Unfortunately, high interest rates for consumers are often unavoidable in comparison
Of course, it sounds appealing to have to perform as a buyer no interest rate comparison. Of course, it saves time when you sign the financing immediately with the retailer. But as a consumer, you have no chance to compare the interest before signing the contract. This means you do not know if it is an attractive offer with flexible terms and favorable credit costs. They can not compare the credit terms of the trader with the competition and lose any transparency that would result from an independent interest rate comparison. Thus, you are likely to accept high interest rates in a spontaneous purchase transaction, without even being aware of it. It would be much more useful for cost reasons, if you opt for a classic installment loan . You can compare and record these online. Within a few days your money is in the account and you can easily pay for the item you want with this money. Ultimately, there is a risk that you will pay the convenience of fast borrowing with high interest rates. That, in turn, is not the only problem threatening to buy retail financing.
So it is the right of withdrawal in consumer credit
When you make a loan from a merchant, the right to cancel remains for the purchase and for the loan. If you decide to revoke the credit agreement, the purchase contract will also be canceled. This means you have to return the purchased goods. Alternatively, of course, there is the possibility to pay them in cash. On the other hand, if you withdraw from the contract of sale, you will no longer have to pay any installments for the loan. At this point, you are not worse off on a purchase on finance than a cash payment. Nevertheless, you should consider well before concluding the contract, whether you want to complete the loan and whether you want to pay the monthly rate of consumer credit. Once the contract has been signed, you must take the trouble to revoke it within the statutory 14-day period, so that the purchase and loan agreement will be ineffective. Incidentally, it looks quite similar with the right of withdrawal. It works if the goods were defective at the time of purchase and are defective after one month. The seller must then repair the damage and have the device repaired. You can withdraw from the purchase after a two-time unsuccessful repair or delivery of a defective replacement device. If you withdraw from the contract, you do not need to continue the loan agreement. In most cases, you will be refunded installments already paid, but you do not have to pay any outstanding payments.
The zero-percent financing as a challenge
A slightly different regulation results in a zero-percent financing. There is no interest here, so financing seems to be particularly attractive. However, according to current case law of the Federal Court of Justice, as a consumer you lose important intellectual property rights if you conclude such financing. Contracts with zero-percent funding are not consumer loan agreements. If you withdraw from the contract because, for example, the delivery was not made properly, you still have to pay the installment to the bank. So even if you return the device due to a defect, you will be required to pay the loan installments. Therefore, you should consider carefully closing a zero-percent financing.