Peter Griffin: Avoid the sharks with up-front online deals

Whatever new gadget I have my heart set on, and at the moment it's a video iPod, my modus operandi has always been, if I can't afford it with the money in my bank account, I just won't buy it.

I guess it's going to be a long time before I own a house if I keep up my "no-finance" policy.

Now an e-commerce website selling everything from plasma TV screens to skateboards has entered the market and will only accept finance as a payment option.

Normally I'd blacklist such a site as one to stay away from, but perweek.co.nz is actually aimed at people who are suspicious of the confusing terms and hidden payments in of some finance deals offered by some retailers.

Here's how it works: you choose the product, set the term you want to make repayments over (up to 36 months) and the site's engine will immediately calculate what the weekly repayments will be. You can then apply for finance online and are told instantly whether your application has been accepted.

If your credit record is sound, perweek.co.nz approves your application, sends you a direct-debit form to authorise payments and then couriers your goods to you free of charge.

Perweek has set up its own finance company to fund your purchases so there are no third-parties to deal with.

It offers a "no tricks guarantee" that pledges it won't dupe you into paying more than you thought you'd have to. It identifies some of the tricks the finance sharks in the market use:

* Offering "interest free" periods followed by inflated interest terms.

* Revolving credit with indefinite terms to make the weekly repayments appear lower.

* Hidden insurance fees.

For a Pioneer 160GB DVD recorder ($1199), weekly repayments spread over 24 months are $13.30 when you pay the minimum deposit of $119. You effectively pay $265 or 21.95 per cent in interest over that period for the DVD recorder and $39 in fees.

Once you've clicked on a product and proceeded to the check-out, you get a full price breakdown with the Baycorp credit check and bank fees bundled into the price and the total interest payable.

I rang Noel Leeming to compare the sale terms on a TV I'd seen on Perweek that was also on sale in-store for the same price - $2999.

Straight away, the salesman cut the 24 per cent annual interest rate to 19.95 per cent, though Perweek's fees were much lower.

He did however offer to let me bundle in a digital camera to get a discount.

He advised me not to take up finance for the products but take the 17-month deferred payment option which puts off payment until the specified term ends.

"For Kiwis with strong financial discipline, these types of offers are a good deal, better even than Perweek," admits Perweek founder Peter Terpstra.

"But this is a numbers game for them because, just like credit cards, they count on people not paying.

"People like to tell themselves they will pay it off but unfortunately they don't and this is how the piper gets paid."