[OT] Fair Trading Act

[Lohsing]

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]

You can check thru the fair trading act Here

[dipstick01]

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]

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]

Also these organizations will investigate if you want .
Here
Advertising Standards Authority Inc
andHere

[Lohsing]

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]

Of course some big retailers have their own finance companies. They get you both ways like that. 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]

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]

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]

> 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