Store finance deals buying guide

Low-cost deals for those who pay on time, exorbitant interest rates for those who don’t — and a warning about deals to avoid.
 
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  • Updated:3 Nov 2006
 

03.Case study: unfair deal

George, a CHOICE reader from Penrith, NSW, recently signed a Flexirent contract for a $2650 TV.

“I’d planned to use three-year interest-free finance and pay it off before interest kicked in, but the Harvey Norman sales assistant suggested Flexirent EzyWay instead,” George says. “I asked if any fees applied — the answer was no. I assumed that renting would cost the same as interest-free finance, except that I’d have the option to upgrade the TV at the end of three years.” A surround-sound system was thrown in to sweeten the deal.

George signed the necessary papers in the store, but got a shock when the full contract arrived in the post a week later. “The monthly payments of almost $110 would accumulate to $3950 over three years. I called Harvey Normanand asked why I was paying $3950 for a $2650 television [or $3049 if you include the ‘free’ sound system, which Harvey Norman values at $399]. They referred me to Flexirent, which said there was nothing I could do: ‘Too bad, you’ve legally bound yourself to the agreement by signing the documents’ was their attitude.”

Next, George discovered the deal had no cooling-off period, so he couldn’t cancel it when he received the contract and realised its real costs. (Later, he realised the $3950 figure was disclosed on the papers he’d signed in the store, but he’d overlooked it, relying instead on what the sales assistant said.) And in a real consumer sting, to get out of the contract after just a couple of weeks, he’d still have to pay the full $3950. “This is so unfair, as I specifically asked the salesman if there were any extra costs.”

  • Flexirent says information and costs are disclosed and explained to customers by regularly trained sales staff;
  • Harvey Norman says due process was followed and the full terms, payment obligations and costs were explained.

Good outcome but concerns remain

In the end, Flexirent offered to cancel George’s contract and give him the TV for the retail price ($2650), paid in equal instalments over two years. The sound system was his to keep free of charge. A good outcome — but one that wasn’t forthcoming until CHOICE got involved, despite George’s numerous calls and complaints.

In the last three years, over 30 complaints related to Flexirent that were made to Consumer Affairs Victoria alone have required conciliation. Complaints included representations made at the point of sale (by third parties), information in promotional material and direct debiting after contracts have expired. Meanwhile, the NSW Office of Fair Trading is monitoring Flexirent and considering what action to take, and consumer credit centres and a debt counsellor we contacted are warning consumers to evaluate the full costs and alternatives before entering into such arrangements.

 

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