Financing

When you buy a vehicle or an expensive domestic appliance, you may be persuaded to enter into a financing agreement. The sales representative often makes more on selling you these types of agreement than on selling you the goods, and so may be very convincing.

However, unless you are unable to get an alternative loan, such as an unsecured personal loan, you are often better off avoid this type of loan altogether. The interest rate is usually much higher than a personal loan, and the vehicle or appliance will remain the property of the financing company until all the payments have been made.

If you default on the payments, the financing company may be able to recover the goods, and you will normally still have to make the remainder of the payments if there is a difference between the proceeds of the sale of the goods and the outstanding debt.

If you have no alternative source of credit and are thinking of signing the financing agreement, read the small print very carefully before you finally decide.