PDA

View Full Version : [OT] Fair Trading Act



Lohsing
08-06-2004, 04:15 PM
Hey guys... sort of an OT post, but wondered what your thoughts are on the current Harvey Norman laptop promotion.

On the face of it, it looked good, but when I had a friend call them regarding the camera and printer "freebie" with finance, I found that the cost of the camera and printer had been "built into" the interest rate... 18.9% or 19.8%.... very high either way...

To be honest, I thought it was illegal to advertise something as free when the true cost was built into the cost of interest... wasn't there some big car company that got fined for doing this??

Lo.

johnboy
08-06-2004, 04:21 PM
You can check thru the fair trading act Here (http://www.comcom.govt.nz/acts/fairact/)

dipstick01
08-06-2004, 04:25 PM
How do you know the cost is built into the interest rate??
The standard interest rate for hire purchase through an appliance store is 19.95% or variations of that rate.

A lot of consumers do not realise that the terms etc of finance are dictated to the stores by the finance companies and not the other way around.

As an example every time a store offers an interest free deal it actually means the shop will be paying a percantage of the total value of the goods to the finance company as a cost of doing the business.
8 to 20% depending on the deal offered. It may not seem much but when you consider that most stores operate on a profit margin of 10 to 20% on almost all mainstream products then you realise that appliance stores do NOT make the huge profits many customers accuse us of.

godfather
08-06-2004, 04:28 PM
But:

The cost is not really built in, given the rate you quote.
For Hire Purchase finance thats quite a normal rate. Low by some opinions even.

Check them out here.
http://www.interest.co.nz/personalloans.html

Remember TINSTAAFL (There is no such thing as a free lunch)

johnboy
08-06-2004, 04:30 PM
Also these organizations will investigate if you want .
Here (http://www.consumer.org.nz/topic.asp?docid=407&category=Legal%20Rights&subcategory=Buying%20goods%20%26%20services&topic=Advertising%20standards)
Advertising Standards Authority Inc
andHere (http://www.asa.co.nz/intro.htm)

Lohsing
08-06-2004, 04:52 PM
Well, the deal is $1799 for an HP notebook cash, or if you finance it over 36 months, you get a digital camera and printer "for free."

I was positive you couldn't advertise you could get the items for free if they were included in the cost of finance...

Lo.

Graham L
08-06-2004, 05:01 PM
Of course some big retailers have their own finance companies. They get you both ways like that. :D I wouldn't be surprised if H-N were like that.


The question is: "If the goodies are "free" with finance, why the hell aren't they "free" with a cash sale"?

It used to be that if you paid cash, the retailers loved you. Now they seem to be like the banks --- they want to charge you extra if you actually use cash type money rather than their marvellous "products".

metla
08-06-2004, 05:04 PM
They wan't you to finance so they can get the revenue from the interest,As mentioned they will be putting up the capital for the loans.

The amount financed doesn't change so you do effictivly get the items for free.

dipstick01
08-06-2004, 05:48 PM
No Harvey Norman doesn't own or do their own finance. They use AGC as their main finance compnay with Pacific Retail Finance as a back up for the people that do not qualify.
The only Appliance retailer that has their own finance is Farmers. The revenue from interest for the retailer is minimal and they much prefer to do Cash sales.

That is cash folding not Eftpos or credit card which all costs the retailer another 1 to 2.5% of the value. All of which you have to take into account when discounting for cash etc.

If Harvey Norman are offering the freebies on finance then they should be able to offer the same or even better for cash. Please note the camera and printer/dock are NOT of the greatest quality or ability and often do NOT sell for the retail price quoted in their offer.

Murray P
08-06-2004, 06:08 PM
> That is cash folding not Eftpos or credit card which
> all costs the retailer another 1 to 2.5% of the
> value. All of which you have to take into account
> when discounting for cash etc.

Ah but, Armour Guard or whoever collects the cash charge to collect it, it's insured for the amount so the more there is the higher the cost then, the banks charge a cash handling fee which is not insignificant for a largish retailer. That's why the supermarkets are always offering you cash when you pay by EFTPOS (which costs about $0.35/transaction for the big retailers), they don't want it in there drawers and the security aspect is the least of the reasons. Cash costs.

Cheers Murray P

metla
08-06-2004, 06:33 PM
>>No Harvey Norman doesn't own or do their own finance. They use AGC as their main finance compnay with Pacific Retail Finance as a back up for the people that do not qualify.
The only Appliance retailer that has their own finance is Farmers. The revenue from interest for the retailer is minimal and they much prefer to do Cash sales.


Bullocks,even i have been invited by the finance companies to supply all the capital and they will do the paperwork.

And if i purchased 100 grands worth of gear for cash,then onsold them while collecting the 20 percent interest i would be a pretty happy guy.

Every move Harvey Norman make is for profit,i wouldn't under-estimate the sort of deals they put together in the background.

as to this

>>The revenue from interest for the retailer is minimal and they much prefer to do Cash sales.

a sale is a sale,why would the retailer care?,if it goes through finace you get the cash the next day.Some brokers even give the set-up fee back to the retailer as a kick back.

A sale is a sale.

metla
08-06-2004, 06:36 PM
And i wouldn't ever buy anything off Harvey Norman,their gear isn't well priced and their added value schemes are rorts.

dipstick01
08-06-2004, 07:05 PM
I used to work for Harvey Norman from the day they opened in Manukau. They do NOT collect any of the interest from Hire Purchase. On Interest bearing finance terms the store may get a small payment from the finance company. Please note the word SMALL. Our store last year made a total of $700 odd dollars in finance rebates, we put about 3 million $$ through finance but due to the amount of interest free deals offered we considered ourselves lucky to get that much.

Yes stores are ONLY there to make money, hell whats the point of having a shop if it doesn't make money?? but finance is one of the services a lot of shops have to offer to compete. If you do not give similair offers then the customers will go to the store that offers the best deal.

It takes aprox a week to get the money through from the finance.
In general a sale is a sale but in saying that I have walked away from sales that would have either cost the store too much in fees or from special requests that would have ended up with a profit margin that was not worth the effort or time. A sale is a sale but its got to be worth selling too.

metla
08-06-2004, 10:16 PM
so your not longer emplyed by Harvey Norman?,yet you claim to have knowledge of information that shouldn't get anyware near a salesman's ears?

Righto.

They will have a reason to be enticing people to use credit.

That is all.

dipstick01
08-06-2004, 10:30 PM
lol metla
Nope no longer with HN but still catch up with mates from then at the local store here.
I now work for one of their opposition....the local retravision store.
Retail is very similiar nationwide within the various sectors and most of the generalised statements I have made have been from recent experience.

We entice people to use credit so they will come into the shop and purchase. It is then up to us as a salesperson to try and shift their desire to a shorter period of interest free or use another way of paying. We will still accept sales with hire purchase as it is always money in the bin but we can make more money from other methods of payment.

Any salesman will pick up the way a store operates over time. We are lucky in the way our boss explains things to us. It makes our job a lot easier when we understand why things happen certain ways and we can then do our best to make a fair profit for the boss......hell if the company makes money then it is more likely our salaries will increase also. And no I am NOT on any form of commission either, we are salary only.

metla
08-06-2004, 10:44 PM
So how is it the store makes more money from a cash sale then from finance.

I know when I make a sale I get the exact same cut no matter how they pay, or are you simply saying you can close the deal faster if its cash and take a break, lol, I mean hit up another sucker, lol, I mean take care of another customer's needs.

Kidding aside, Retravision is the one and only appliance store I don't view negatively.

Baldy
08-06-2004, 10:45 PM
> And i wouldn't ever buy anything off Harvey
> Norman,their gear isn't well priced and their added
> value schemes are rorts.

Thats a WILD generalisation Metla

Baldy
08-06-2004, 10:52 PM
>
> Yes stores are ONLY there to make money, hell whats
> the point of having a shop if it doesn't make money??
> but finance is one of the services a lot of shops
> have to offer to compete. If you do not give similair
> offers then the customers will go to the store that
> offers the best deal.
>

I totally agree Dippy......... Even this (http://www.computermedic.co.nz) company is set up to make a profit and sell stuff on finance.

Eh Metla?

Baldy;-)

metla
08-06-2004, 10:58 PM
Oh i dont think so,every single item i have seen in a Harvey norman(granted i only looked at the items that interested me) are available at a btter price elsewhere,for example the bedroom suite we purchased was the exact same price but missing 1 piece,looks good on paper untill you get around their tricks.

Plus the service is crap and dim.

There entire range of DV cams are available down the road for $100 bucks less for every item,same for the stereo's.

The computers are junk.

And they have add-on crap like insurence that don't make any sence whats-so-ever but sure sound slick coming from the salesperson.


Ill stick to Dimoks Retravision Wanganui,unless it was a computer,in which case i would go to a computer store,and no pooints for guessing which one.

-=JM=-
08-06-2004, 10:59 PM
> The only Appliance retailer that has their own
> finance is Farmers. The revenue from interest for the
> retailer is minimal and they much prefer to do Cash
> sales.
Really?

Bond & Bond
Noel Leeming
Big Byte
Pacific Retail Finance

All run by Pacific Retail Group?????

metla
08-06-2004, 11:08 PM
>......... Even
> this (http://www.computermedic.co.nz)
> company is set up to make a profit and sell stuff on
> finance.
>
> Eh Metla?
>
> Baldy;-)


hmmm...i can barely make out the site for all the finance availble banners.....sure is a nice guitar in the window though.

Baldy
09-06-2004, 07:19 AM
> Oh i dont think so,every single item i have seen in a
> Harvey norman(granted i only looked at the items that
> interested me) are available at a btter price
> elsewhere,for example the bedroom suite we purchased
> was the exact same price but missing 1 piece,looks
> good on paper untill you get around their tricks.
>

What was the missing bit? Hopefully not the mattress.

Sb0h
09-06-2004, 09:12 AM
Pacific Retail Finance does offer rebates to retailers that sell their finance packages. Typically they will give the retailer an interest rate percentage that they charge and allow the retailer to put 1-2 percent on top as a margin, which gets paid at the beginning of the finance contract. So you will find that Pacific Retail is probably charging a "wholesale" rate of 16-17% and HN are putting 1-2% on top. So if you put $3mill of sales through finance then you should have gained between $30-$60k in commission.

Stores DO prefer to sell on finance rather than cash as not only do they get a commission but it is guaranteed payment direct into the retailers account. No cash to count, no cheque fees (or bounced cheques), no credit card fees just a simple direct credit. Not many retailers I know would really like to have a large amount of cash on site if only for security reasons, most would prefer direct credits to their account.