Paying in instalments is very common, especially for home appliances and electronics. Although applying for and entering into an instalment contract can be done without visiting the creditor, e.g. in a store, it is nonetheless a financial obligation and a consumer credit contract.
In case you are charged a fee for the instalment payment (e.g. an interest), it is considered a consumer credit contract. To this type of instalment contract, principles of responsible lending apply, which set obligations both to the creditor as well as the consumer. In case you are not charged a fee for acquiring the credit (the price of the item is the same when paying in full as it would be upon the end of the instalment contract), it is not considered a financial service.
Prior to taking an instalment
- Think about whether you really need the product or service and if paying in instalments is the best option,
- Go over your income and existing financial obligations and be realistic about your ability to pay, and share the information with the credit provider,
- Request instalment offers from several providers and compare the terms and conditions of the offers,
- Find out whether a prescheduled repayment would entail a refund to the credit provider,
- Ask the credit provider for a copy of the draft contract so you can thoroughly examine it,
- Ask the credit provider for addition information if anything remains unclear regarding the terms and conditions of the contract,
- When reading the terms and conditions of the contract, make notice of who and how must take action if the purchased item has a defect,
- Be aware of the fact that although you have the right to withdraw from the contract in case the product has a defect or if the terms and conditions of the contract have been violated, you will not be refunded the interests paid to the credit provider.
In case you are charged a fee for instalment sale (e.g. an interest)
- In addition to the offer, ask the credit provider for a consumer credit information sheet, to compare terms and conditions of the offers,
- Find out how is interest calculated: either on the basis of the initial price of the product or the remaining sum to be paid to the credit provider,
- In case you wish to withdraw from the instalment contract within 14 days, you are required to also withdraw from the economically linked sales contract,