Back to our consumer issues this week after noting that Bob Adams from River City found an easier solution to his debt problems than many of us - he had a rich pal who paid them all off for him in exchange for a share of Bob’s business!

Anyway to Guarantees and Warranties. I had to buy a new printer recently and was surprised when I was told that I would have to buy a special extended warranty because “If your printer breaks down after 12 months you’ll have to send it back to the Manufacturer.”

I politely told the sales assistant that if it broke down I would bring it straight back to the shop that I bought it in. “Oh no you can’t do that. It’s not our responsibility after 12 months. It will have to go back to the Manufacturer.”

It was at that point that I had to speak to the Manager and explain that he should not allow his staff to give consumers incorrect and confusing information. To be fair he did apologise but I have not been back to that particular shop to find out if any training has subsequently been carried out.

It’s hardly surprising if we get confused as consumers when shop staff give us such incorrect information. There has long been confusion over warranties, extended warranties and guarantees so let’s set the record straight.

Most goods that you buy will come with at least a 12-month manufacturer’s guarantee. This is in addition to the statutory rights that you have under the Sale of Goods Act that allow you to take faulty goods back to the retailer that sold them to you in the first place. So effectively you can choose whether to complain to the retailer or the manufacturer if something goes wrong - but the retailer is not allowed to tell you that it is nothing to do with them, because it is! Your contract is with the retailer and they have a liability to deal with any problems for you - in some case for up to 6 years from the date of purchase.

Also you should note that if your goods break down in the first six months after you have purchased them the default position is that they were faulty at the point of sale unless the retailer can prove otherwise. On that basis you should be entitled to repair or replacement immediately.

And just because the manufacturer’s guarantee runs out after 12 months doesn’t mean that you don’t have any protection if your television breaks down after 18 months. You would expect a television to last for more than 18 months and it is, therefore, unreasonable for it to break down after that period of time so my starting point would again be the shop that sold me the TV.  But you may at this stage get involved in a debate about how long the parts should have lasted and whether you are expected to pay part of the cost of any repairs and this is where extended warranties can be useful. But only if you have done your homework and worked out the cost involved and made sure that you are not covered elsewhere.

Remember that the goods will come with at least a 12-month manufacturer’s guarantee and nowadays many goods already come with longer guarantees. It may also be the case that the goods you buy are covered by the credit card that you used or by an insurance policy that you already have elsewhere so check all of these things before splashing out on an extended warranty that you may not need.

Think carefully as well about the value for money offered by an extended warranty. It is likely to be expensive compared with the amount you would normally pay out in repair costs or be able to gain free through using your statutory rights.

 

 

 

 

 

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Poor Bob Adams from River City is really up against it these days. Not only is he infamous for his sartorial inelegance but it looks as though his money sense has deserted him recently as well as his dress sense. He has borrowed money from a variety of sources and doesn’t seem to understand the amount he will have to pay back in interest. On top of that he thinks that a win on the horses is the best way to generate some money to help him out of his mess.

Borrowing money is a fact of life for most of us these days, and for most of the time it is perfectly manageable. It’s only when a change in circumstance brings about a reduction in income, or an increase in stress, that debt can become a problem.  And it can be for all kinds of reasons - losing a job, illness, separating from your partner or even a new baby. The important thing to remember is not to panic because there are many ways to get back in control.  Debt can hit any of us at any time and it is nothing to be ashamed of.

So here are some tips and hints to help Bob, and anyone else who is a bit unsure of the best way to deal with money worries:

 

Talk to Someone!

 

You shouldn’t have to deal with your money worries on your own. Too often we want to bury our heads in the sand, worried what our friends and family will say if they find out we are in debt.  They probably have the same worries as you. They might have dealt with them and be able to offer you useful, free advice so don’t try to carry the weight of the world on your shoulders.

 

 

What should you do if you can’t keep up with your repayments?

 

The important thing to remember is that lenders will usually want to help – but you have to let them know you have a problem. Tell them before you get behind with your repayments. Lenders will be generally be sympathetic to your own situation, provided that you tell them honestly what your financial circumstances are and you work with them in trying to reach a repayment agreement, and provided that you tell them before you get behind rather than when six months have passed. They don’t like being ignored and the sooner you approach them to tell them there may be a problem the more flexibility they will have when trying to help find a solution.

 

 

 

What are the rules for dealing with your debts?

 

·        Don’t panic or ignore the problem

·        Don’t borrow money to pay off your debts. 

·        Don’t take out a loan secured on your house without seeking independent advice first

·        Seek FREE independent money advice – Citizens Advice or Money Advice Scotland can both help

·        Check whether your payments are covered by insurance

·        Check you are claiming all the benefits and tax credits you can

·        Work out a Personal Budget and send it to your creditors

·        Get in touch with creditors straight away

·        Tackle your priority debts first

·        Work out reasonable offers of payment that you can afford

·        Contact everyone you owe money to.  If you make arrangements to pay some creditors but not others, you could run into difficulties again.

·        Don’t be fooled by adverts in the National Press offering to reduce your payments from £600 per month to £150. They may be able to do this but only if you agree to pay off your debt over a much longer period of time.

 

I’ve seen an advert for a Debt Management Company, can they help me?

 

There is a common belief that Debt Management Companies will take over your debt for you – they don’t.  They are likely to speak to lenders on your behalf but they will probably charge a fee for doing this. You should speak directly to your lender instead of going to one of these Debt Management Companies. They may well be able to reduce your monthly repayment, but only because they will be increasing the length of time that you will have to make repayments.

 

 

How will debt affect my credit rating?

 

Information about your loans is passed to Credit Reference Agencies each month, providing notice of your repayment history to potential new lenders.  Your ability to obtain new credit facilities may be affected in the future.  You can check what information Credit Reference Agencies have about you by writing to the following, or by applying for a credit reference on-line.

 

·        Equifax Plc - www.equifax.co.uk

·        Experian Ltd - www.experian.co.uk

 

 

 

Credit Card Tips

 

1. Look for a 0% balance transfer deal and transfer existing cards until the deal runs out. Repeat this for as long as you can! Check to see whether the interest free deal applies to new purchases as well as the balance you have transferred.

 

2. If you can’t get a 0% deal then check out the APR on the card you use. The higher the APR the more interest you will pay on any outstanding balance. Look for the card that offers the lowest possible APR, remembering to also check out what penalties are likely to be added for any late payments.

 

3. Remember that Store Cards and Credit Cards are different. Store cards can only be used within the group that issues them while Credit Cards can be used much more widely. Store cards can be very expenseive so only use them if you qualify for some special deal or if you can afford to pay off the balance before Interest starts to kick in.

 

4. Don’t use your Credit Card to take a cash advance from a hole in the wall machine. The interest rate is likely to be be even higher than if you use it to purchase goods.

 

5. Check out the interest free period between buying goods and interest starting to become due and try to clear your balance before that happens.

 

6. Use your credit card for any purchase over £100. That way the credit card company is reponsible for the quality of the product as well as the retailer and any problems can be taken back to them for resolution.

 

7. Don’t build up a wallet or purse full of Credit Cards. Pick one that offers good value and stick with it. It’s much easier to budget this way.

 

8. If your credit card company writes to you to tell you they have increased your credit limit then you are allowed to write back to say that you are happy with the limit you already have. It’s not a licence to let you go out and spend a fortune that you don’t have.

 

9. Pay more then the minimum payment every month otherwise your balance will never go down. Just because your credit limit is £3000 doesn’t mean that you have to maintain a balalnce at that level.

 

10. Set up a direct debit to make your regular monthly payments to your credit card. That way you will never get hit for late payment charges. If you want to make extra payments then you can still do so at other times.

 

For more on Bob’s money worries, and for more money advice go to  www.bbc.co.uk/raw

 

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