KNOW YOUR RIGHTS WHEN PAYING IN INSTALMENTS THIS SHOPPING SEASON

As the shopping season approaches, many people are starting to plan for gifts, clothing, appliances, holidays and other ‘once a year’ purchases. With so many ways to pay these off over time, spreading the cost can seem convenient, but paying for something over several weeks or months can make it easy to lose sight of what you are agreeing to.  

Lay-by, Buy now, pay later (BNPL), instalment plans and store credit may all allow you to spread the cost, but they do not all give you the same rights or work in the same way. 

A Clientèle Legal representative says understanding an agreement upfront can prevent problems later. “Before choosing a payment option, check what you are committing to beyond the first payment. Ask what the full cost will be, how many payments must be made, when payments are due, and what happens if you miss one.” 

What kind of agreement are you entering into?

With an instalment sale or store account, you receive the goods before you have finished paying for them. These are credit agreements regulated by the National Credit Act (NCA). Before entering into such an agreement, a credit provider is generally required to conduct an affordability assessment, which may include considering information from credit bureaus as well as information provided by the consumer. 

Lay-by works differently from credit. You pay for an item in instalments, while the retailer keeps it until you have paid the full agreed price. Questions can arise when circumstances change before the item has been fully paid for, for example if you change your mind or the item later goes on sale. This is where the differences between payment options can make it harder to know which consumer rights apply. If you choose to cancel the lay-by, the amounts you have paid remain your property, although the retailer may charge a reasonable cancellation penalty of up to 1% of the full purchase price. 

BNPL products are often structured differently from traditional credit agreements and may not always fall within the same regulatory framework as conventional credit. Consumers should carefully review the provider's terms and conditions and understand what protections apply to the specific product being offered. 

What should you check before committing?

Look beyond the monthly payment. Check the cash price, deposit, number and timing of payments, interest, fees and the total amount you will pay. Make sure the payments will remain affordable alongside your other monthly expenses and debt repayments. 

You should also understand what happens if you miss a payment. An unexpected expense, delayed salary or tighter month can quickly affect your ability to keep up with instalments. Knowing what a missed payment means for the agreement, including any fees or potential cancellation, can help you understand your options upfront. 

Depending on the agreement, you could face additional charges or have the matter handed to a debt collector. For credit agreements, missed payments can also affect your credit record. 

What if something goes wrong?

Keep your agreement, receipts, payment records and any messages or emails about the purchase. If you cannot keep up with the payments, contact the provider as soon as possible and ask what options are available. If you believe you are being charged unfairly or that action is being taken against you unlawfully, do not simply accept it. 

Clientèle Legal recommends getting legal advice: “Consulting with a legal professional can help you understand whether the steps being taken are allowed and what you can do about them. Knowing your rights can also help you address a problem before it escalates.”