The price of motorcycles sold in installments is 25% higher than the spot price per unit, according to Commerce and Industry Secretary Ramon M. Lopez.
Lopez said it was discovered by the DTI as it held public hearings on the draft memorandum circular that will promote payment options in consumer transactions and ban the sale of goods and services on installments only. .
According to Lopez, the price difference for motorcycles in installment payment is 25% greater than the price for payment in cash. The higher unit prices for the installment payment are due to the high interest rate, he said.
Lopez stressed the need to give consumers the choice to pay in cash to save on costs, especially if they have savings to pay for their purchases in cash.
From January 2019 to January 2021, DTI received 3,060 consumer complaints about the one-time installment payment option implemented by motorcycle dealers and stores. The complaints have reported that the motorcycle seller insists he pay in installments even though he is willing to pay the full value in cash.
Consumers should be provided with payment options when purchasing products and services, given the practice of a number of retailers requiring installment-only sales, the DTI considers it necessary to reiterate applicable provisions of the Philippine Consumer Law and other relevant laws to ensure that consumers are adequately protected.
To address this concern, the Under Secretary of State for the DTI Consumer Protection Group (CPG). Ruth B. Castelo explained, “DTI is stepping in to address this consumer concern by limiting their payment options not only for motorcycles, but also for other products and services they need.
DTI-CPG Assistant Secretary and DTI-CCRC Competitor OIC Atty. Ann Claire C. Cabochan explained: “Through this circular, the DTI also aims to underline the consumer’s right to choose and have access among the various options for purchasing products and services, including the method of payment.
Under Article 52 of the Consumer Law (RA 7394), “An act or practice is deemed to be unfair or unreasonable when the producer, manufacturer, distributor, supplier or seller, taking advantage of the physical or mental infirmity of the consumer, his ignorance, his illiteracy, lack of time or the general conditions of the environment or the environment, induces consumers to conclude a sale or a lesser transaction contrary to the interests of the consumer or grossly bias in favor of the producer, manufacturer, distributor, supplier or seller. “
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