Friday 25 April 2008

Credit where credit’s due

I have SUCH mixed feelings about credit. On the one hand of course credit is a good thing. It’s just a form of borrowing and almost all of us borrow money from time to time. Very few of us can afford to buy cars or houses for cash. We have to go to a bank, fill in forms, have every last part of our lives examined and, if we’re lucky, we are lent the vast sums needed to get hold of some property or wheels.

There’s nothing shameful about this. The richest people, the largest companies and even nations do it. Luckily we live in a country that isn’t hugely in debt to the rest of the world but borrowing is around us every day.

The down side to the credit experience is the shameful exploitation, naiveté and, frankly, gross negligence we often see.

Scandalous. That’s the best way to describe what we sometimes see. It’s a scandal. A few months ago a large furniture store we walked past had a big poster up in the window which offered a range of irresistible items, including a bedding protector. This glorified sheet was available for cash for the modest sum of P199. Immediately beneath the cash price it said that you could also buy this on credit.

After a deposit of P72 you would then pay the store 24 monthly instalments of P70. Do the maths. Even if you can’t do the maths in your head or you don’t have a calculator handy can’t you see that that is a hell of a lot of money compared to the cash price of P199? The total amount for this fancy sheet on credit is a staggering, jaw-dropping, shameful, outrageous and scandalous P1,752.

That’s nearly nine times as much as the cash price.

First thing. If you can’t afford to spend P199 in cash on a sheet then you can’t afford it at all. Do not buy it. Go without.

Second thing. The store is breaking the law. There’s currently no limit on the extra amount that a store can charge when you buy things on credit. However what they ARE obliged to do, by law, is to tell you up front what the total repayment will be. Section 6 (e) of the Control of Goods (Marking of Goods) Regulations 1974 says that “where goods are offered for sale… by way of credit sale” then the store must display, “in characters of similar size”, “the total amount to be paid by way of deposit and instalments”. By not stating this the store was breaking the law.

Third thing. Why would anyone in their right mind buy this on such a scandalous basis? Where are our brains? Where are our mental arithmetic skills? Where are our cellphones with the built-in calculators? I know it’s scandalous that stores try to exploit consumers with these schemes but why do WE volunteer for them? Nobody is made to sign a credit agreement at gun-point. We sign them all by ourselves.

Back to the scandal. Why won’t most stores let us take credit agreements away with us to think about them overnight? Why do they pressurise us to sign instantly? Why? Because they know they’ll then have us trapped. We saw a credit agreement some while ago that had a tiny little clause at the end that said “I have fully understood the terms and conditions of this sale which have been fully explained to me and I undertake not to contend to the contrary”.

Put more simply this says “I’m a liar if I ever say they lied to me”.

The same agreement says that “I have examined the Goods and XXXXX has made no representation and no warranty to me including this sale. The Goods have been sold to me as seen, inspected and approved by me”.

Now that is just a bare-faced LIE. They ask you to sign an agreement that confirms you have already inspected goods that haven’t even been shipped to you yet?

Anyway, we all know this sort of things happens, we’re all intelligent people and none of us would fall for such rubbish. Would we?

So is there any good news? Is there light at the end of the tunnel? Well, there is a bit.

We were invited last week to the launch of a new initiative by TransUnion and BotswanaPost. TransUnion is an international credit information agency that records details on consumers and their credit history, both the good and the bad. They’ve been in Botswana for years, previously known as ITC or TransUnion ITC.

With BotswanaPost they’ve launched a new scheme which allows consumers to see their own credit record at post offices throughout the country. It’s starting at three post offices in Gaborone at the Station, Central and Bontleng branches. For P30 you and I can see one of their dedicated staff and get a full listing of our record. This will show our basic contact details, every application we’ve made for credit and every time we’ve done something bad. It’s the same information the banks and stores can see about us. This will allow you and I to see why something might have been declined but most importantly to check that the information held on us is correct.

So yes, there IS some good news. It doesn’t stop stores misbehaving but it does give us a bt of control over the information they keep on us. Who knows, perhaps if you discover that your credit record is squeaky clean you can even get a discount on that next car loan?

This week’s stars!

  • Ane from Pharma West at Game City for extraordinary service.
  • Scott at Medswana for really WOWing a customer.

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