When we´re low on cash and want to buy something, it can be very tempting to borrow money.
But before you use your credit card, take out a loan or borrow from the store, make sure you know how much it will really cost you.
If you don´t pay cash you´ll probably end up paying more.
Before you get credit
- Ask yourself: do I really need what I´m buying with credit and can I afford it?
- Shop around for the best deal.
- Find out the terms of the credit before you sign any contract including fees and charges, interest rate, repayments, and whether security is required.
- Before you sign the contract, make sure you check the ´fine print´. These are conditions or fees usually written in small writing on the contract.
- If you need help with the contract call the Office of Fair Trading on 13 QGOV (13 74 68).
Look out for
- Very high interest rates.
- Upfront fees.
- Lenders who only have a mobile phone contact and no business address.
After you get credit
- Make sure you get a copy of the contract.
- Read your statements (loan, credit or savings accounts) and check that all information is correct. If it´s not, question it.
- If you can´t afford your repayments (you lose your job or get sick) you may be able to have the contract changed.
Interest-free deals are one way to buy household goods that you need in a hurry. However, if you don´t pay off the loan before the interest-free period finishes, it can turn into a very expensive option. Make sure you know how much you will need to repay each pay day to ensure you don´t get hit with high interest rates at the end. You should also check out the fees and charges that apply during the interest-free period so you know how much the interest free deal will really cost you.
If you need to buy a household item urgently, such as a fridge, or washing machine, you may be eligible for an interest and fee-free loan through the No Interest Loan Scheme (NILS).
- Pay on time every time to avoid late fees.
- Keep your paperwork in a safe place.
- It is illegal in Queensland for lenders to charge more than 48 per cent per annum interest. If your lender charges you more than this, call the Office of Fair Trading on 13 QGOV (13 74 68).
Don´t take the risk-read the fine print!
Harry and Lola wanted a new boat for their mob to go fishing. They borrowed $2000 from a bloke in town who offered ´On the spot loans within the hour´. When Harry and Lola got their first loan statement in the mail, they realised they were being charged interest at 35 per cent plus other unexpected fees and charges.
They were paying more than they needed to. While Harry and Lola now have the boat, they´re stuck with high interest payments. If they had read the small writing on the contract or asked questions they might have shopped around for a better deal elsewhere.
Last reviewed 11/04/2013