Friday, 24 September 2010

The Voice - Consumer's Voice

Dear Consumer’s Voice #1

There are adverts in the media about what they say is a very good business opportunity called “Buy Bridge Town”. Does this look like a genuine business or do you think it’s suspicious?

I called their office line and a sales lady encouraged me to buy fast because soon there will be nothing to buy.

There doesn’t seem to be anything particularly suspicious about the project but the amount of money they require you to invest obviously means you should give it a LOT of thought beforehand.

The Bridgetown development is planned to be a complex of 92 units in Kasane, near but not actually on the banks of the Chobe River. Their web site says that the complex will:
“function as a fully self catering luxury lodge, with the patrons having the luxury of their own restaurant, Lodge style reception, management office suite, Laundry, Spa/Wellness Centre, Children's playground, transport links and fully stocked convenience store, a HOME AWAY FROM HOME.”
You can get one of these units either by buying it outright or you can obtain one on a time-share basis. This is what I imagine most people would want to do. However, according to the reader who contacted us the entry price is P45,000 which, by anyone’s standards is a LOT of money. Apparently for that you get to stay in the complex for one week of every year for the next 25 years. However, you have to ask yourself whether you’re always going to get the week you want. There’s going to be huge competition for the popular weeks around public and school holidays and most timeshare schemes I’ve encountered actually place restrictions on these peak periods, reserving them for people who have elected to pay even more money to reserve the popular slots.

What timeshare schemes often also do is offer you an “investment opportunity” which allows you to earn back your investment by renting out your week to other people, hopefully making you a profit. However this is even more risky. If it’s hard enough to get a week when YOU want it, how difficult must it be to juggle the week you can get and the week that your potential customers want?

Let’s not also forget that any profit you make from renting out a timeshare in a property is “income”. You’ll need to tell the tax people about this before they find out and come calling on you!

The biggest concern for me personally would be that this development, as far as I can tell, isn’t finished yet. These 92 units don’t actually yet exist and nor do the various facilities they offer. In effect, by buying a timeshare you are funding the construction of the complex.

So our advice is neither to invest nor not to invest. Our advice is to do some serious research into the viability of the project. Then, and only after you’ve satisfied your scepticism, should you consider writing that cheque!

Dear Consumer’s Voice #2

I applied for a personal loan of P82,000 from my bank. Later on, I wrote them a letter on the 10th July 2010 to cancel the loan, five days later the bank credited my bank account with the loan amount, which they later took out. When taking out their money, they took P820 from my account which they claim is an arrangement fee. My query is that the contract agreement I signed with them says the arrangement fee is only deducted from the loan amount and not the account. Now they are saying as long as you have applied for a loan from their bank, it doesn’t matter whether the following day you cancel it, they will always deduct the arrangement fee. Their agreement doesn’t stipulate that there is a penalty charge for cancelling loan applications

I suspect that this will depend very much on the exact timing of your application and what it says in the loan application form you signed.

Clearly there’s a difference between changing your mind while the ink is still wet and before a bank, or indeed any other organisation, has had a chance to start processing your application and when they have actually started to the work. If your change of mind was very rapid then I would expect a reasonable organisation to be lenient with you. However, if they had actually started doing the work, doing the credit checks, making the calls to see if you were a good risk then I think they’re probably entitled to charge you for their time.

Most importantly though is what it says in the loan application you completed. Almost certainly there is a clause in the application which says that there is a fee, in your case it seems to be 1% for arranging the loan. The fact that you changed your mind might not be relevant to that agreement. It’s possible that the bank will just say that you applied for a loan, they arranged it and you agreed to pay for it.

However I suspect the key thing is the timing. You don’t give the date you applied for the loan, perhaps you can send that to us as well as a copy of the loan application form and the terms and conditions? We’ll have a look and see if there’s any hope of a refund.

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