KEY POINTS:
For a credit crisis it's still ridiculously easy to get into debt.
I found out just how easy it was last week when negotiating terms for the purchase of a consumer item.
You want an 'interest free loan'?
Sure, why not?
Hey, guess what, you're already in 'the system' - give me some ID, sign here.
There was no fact-checking, no word of caution from the salesman, just a quick call to his mate at the credit firm to make sure I wasn't wanted for previous debt evasion and off you go.
And even though I'm reasonably confident I can pay off the loan before they send someone round to break my knees, I found it a very painful process.
Painful because I hate being in debt but also because I couldn't quite figure out how much I was paying for the privilege.
I have been writing about financial services long enough to know that nothing is for free - including interest-free debt. Somewhere, someone was taking a cut from my little transaction but who was it and how much did they get?
Intuitively, I can see that the retail outlet has built the cost of whatever finance deal it has brokered with the credit firm into the price of the product. But it irks me that I don't know exactly what I paid for the finance. I think these costs of 'interest-free' loans should be explicit so consumers can at least make some sort of informed decision.
Perhaps having the true cost of finance laid out might make some of us hesitate before taking on the debt, which is something the Retirement Commissioner, Diana Crossan, has also been agitating for this week.
According to Crossan, despite (or because of) the economic crisis more people, especially the young, are slipping into debt without understanding its price.
The release includes some handy tips you should know anyway such as: "Think before you take on more debt - it's easy to get into and hard to get out of."
You want a loan? Interest-free?
David Chaplin
Pictured: Retirement Commissioner, Diana Crossan. Photo / Lynda Feringa
