Metro Manila (CNN Philippines, May 11) – The Trade Department has issued an administrative order banning an “installment only” mode of payment for consumer goods, including the purchase of cars and motorcycles.
Under Department Administrative Order No. 21-03 issued last March 23, consumers must be given an option to pay in cash, installment, or the combination of the two modes. The selling price of a product should be the same regardless of a customer’s mode of payment through debit or credit cards, QR codes, electronic fund transfers, and other digital means.
Trade Undersecretary for Consumer Protecion Group Ruth Castelo said the order was issued after the agency received many complaints, especially from buyers of motorcycles, that consumers are only allowed to pay in “installment only” basis, regardless of modes of payment.
“As we dug deeper, we found that this has been a practice that is proliferating in the market,” Castelo told CNN Philippines’ Traffic Center on Tuesday.
Under the DTI order, the seller cannot impose rates higher than the prevailing market interest rate.
Castelo said that companies or distributors that have in-house financing schemes are imposing at least an 8.33% monthly interest rates in installment-only payments. The rate is way higher than the monthly credit bank rates of 2-4%, she added.
Castelo also said both the seller and consumer must agree on the interest rate before a product can be purchased. The seller also cannot collect advance interest for more than one year.
For bigger items, the seller is required to release documents that will show ownership of the buyer and must comply with the requirements in case of repossession of products purchased on installment.
Violators of the new DTI order will be imprisoned and fined in accordance with the penalties stipulated in Republic Act 7394 or the Consumer Act of the Philippines.
