The Department of Trade and Industry (DTI) is preparing a department order or a joint memorandum circular against installment-only schemes adopted by motorcycle dealers and will look into the high interest rates being charged.
At the Senate public hearing of the Committee on Accountability of Public Officers and Investigations, DTI Secretary Ramon Lopez said the agency will conduct consultation on the planned order which could also cover other vehicles.
Lopez also described as unjust and illegal a practice of some dealers requiring buyers to sign a promissory note that states they agree to pay 5 percent interest of each unpaid installment per month computed from their due dates.
This is higher than the interest charged by credit card companies.
“Consumers should have a choice if they want to buy cash so they don’t have to pay interest. In fact if they buy cash, buyers should get a discount. We get reports that most of the time, buyers are being encouraged … and forced to buy in installment,” Lopez told the hearing but noted based on practice, the charge for installment is about 3 percent especially if it is bought by credit card.
Lopez admits that installment facilitates the acquisition of motorcycles or even cars but dealers which insist on offering just on installment get incentives from financial institutions out of the amount.
He said the Fair Trade and Enforcement Bureau has received 3,060 complaints related to motorcycles of which bulk involves delay in the issuance of an OR-CR which they refer to the Land Transportation Office.
Lopez said motorcycle sales related complaints center on the refusal of motorcycle dealers to release the certificate of full payment and the practice of sale on installment- only even if the buyer is willing to pay the full value in cash
To date 287 of the 3,060 sales related complaints have been resolved through mediation.