Issued By
North Yorkshire Trading
Standards Service
KEEP DEBT UNDER CONTROL
North
Yorkshire Trading Standards officers are warning consumers to take care when
purchasing goods on credit and to shop around for the best deals.
North Yorkshire Trading Standards Service is
joining forces with the Office of Fair Trading to promote a national campaign to
“keep debt under control”. Increased
access to different forms of credit can lead consumers to over extend themselves
and to be unable to afford repayments.
This may happen as a result of losing their job, falling ill or simply
through mismanagement of finances. It
is startling to note that in 2000 almost 23,000 homes were repossessed by
mortgage companies.
North
Yorkshire Trading Standards Service is contacted on a daily basis by consumers
with problems relating to purchases made on credit, examples of which are:
·
A Ripon lady visited a company in Leeds. She agreed
to buy a vehicle and believed that she was signing a finance agreement for £6,400.
However, with all the finance charges, payment protection insurance and
mechanical breakdown insurance that she was required to take out on the vehicle,
she ended up agreeing to pay in excess of £11,000 for the motor vehicle. The
annual percentage rate (APR) that the consumer was being charged on the purchase
was almost 40%.
·
A consumer with a poor credit history took out a
loan for £6,000 secured on his home at an annual percentage rate of 39.1%.
The high rate of interest caused the consumer problems and some payments
were missed. The interest charges and the penalties which resulted have
led to the consumer now owing a debt of £98,000 and facing the prospect of
losing his home. North Yorkshire
Trading Standards Service is currently investigating the case on the basis that
the rate of interest charged was extortionate.
·
A Skipton consumer entered a hire purchase
agreement with a car dealer. The
agreement was taken out in December 1998 and the consumer made regular payments
with some extra payments to clear off the debt.
Even so the consumer was distraught to find that she was visited by
bailiffs who attempted to repossess the vehicle from her.
It transpired that the credit broker had not been passing on her payments
to a hire purchase company, who she did not even know existed.
Stuart
Pudney, Head of North Yorkshire Trading Standards Service said:
“Salesmen
are keen to persuade consumers to purchase goods on credit, not least because
there is often extra commission to the salesman for doing so.
However, our experience shows that consumers should not be rushed into
deals of this type. If at all possibly they should take the paperwork away,
consider it in detail, look for extra charges, consider the total amount payable
over the lifetime of the agreement and, in particular, compare the annual
percentage rate with other providers of credit.
“The
annual percentage rate (APR) is the price for the credit that can easily be
compared between different types of lenders and from deal to deal. Consumers
will often go to great lengths to get the cheapest price for the goods but will
not shop around for the cheapest form of credit.
This is often to their cost, with the extra that they pay for credit
outweighing any saving on the actual price of the goods. A recent survey of
shops in North Yorkshire showed a wide variation in the cost of credit, the most
common APR for in-store credit was in the region of 19.8% over a 3 year period,
but this varied from the highest level of 29.8% to around 9%.”
If any consumer has encountered problems with a
credit deal they should contact North Yorkshire Trading Standards Service on
01609 780780. Anyone who is in debt and wishes to get advice on the best way to
deal with it should contact their local Citizen’s Advice Bureau.
12-11-'01
NOTE TO EDITORS:
Note the consumer in the second case Mr Fordyce is willing to speak to the press
and may be contacted on the mobile number 07714 100153.