Monday, November 07, 2005

flames of fury 7

Courts Mammoth way to mammoth debt SM Mohamed Idris Nov 7, 05 4:21pm

We call upon the government to stop the latest scheme by a company (Courts Mammoth) to increase its sales because it will only encourage consumers to get deeper into debt. This company has advertised that it can pre-approve purchases of up to eight times the consumer’s salary. No minimum income is required and approval is instant and hassle free. Consumers can also choose to pay for their purchases in weekly or monthly instalments for up to four years. It is very irresponsible of the company to give such a large sum of credit to consumers. Even banks do not give a credit limit of eight times the salary of credit cardholders. Consumers sign up because they find the instalments affordable. They are not aware of the high interest rates charged by the company. At 1.98% per month the interest charged is almost 24 % per annum. There is also the compulsory documentation fee of RM99. Furthermore since payments are made by instalments, many consumers wrongly believe that they have signed hire-purchase contracts, which come under the Hire-Purchase Act 1967 However their contracts are easy- payment contracts, the terms and conditions of which are dictated by the company as there are no specific laws on easy-payments. Consumers should not be celebrating their forthcoming festivities burdened by unnecessary debt. Being caught in the debt trap is the root of many social problems. The person with unmanageable debt will suffer great stress and fear wondering how to ward off his creditor and to hold on to the goods purchased. The debt trap also leads to the breakdown in family relationships. The government should act to prevent more consumers from falling into the trap laid by the company. The writer is the president of the Consumers Association of Penang.

It is greed that made one bought goods on credit. When the terms are easy and payment are little per week many always think it is easy to acquire a semblance of materialistic status. Worry about payment later. Now it is to show a semblance of 'richness' in the eyes of the neighbours. It is a trap as with other forms of credit purchases. The debt trap will increase when everyone wants to pursue materialistic wants in excess of his/her needs. The interest payment per year is high (24%) yet many folks dont see it that way. What they see are the good in the houses and they could enjoy it. This feel good feeling keeps them smiling on the short term. The long term is repayment period. When one is down the road of hunger or worry about the next meal then one recognizes the folly of acquiring goods beyond one requirements. So live within the means. Dont live on credit as far as possible!

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