Receivable/Accounts - Information for Credit and Collection Issues

Sunday, November 4, 2012

Financial Literacy - Read the Contract!


 
November is Financial Literacy Month, and that means teaching consumers what their rights and options are.  The best place to start teaching consumers about financial literacy would be our young adults heading out into the world. 

Our school curriculum is starting to teach about financial literacy, and that is excellent, but it doesn’t deal with harsh realities such as collection agencies, car repossessions, poor credit decisions that could hamper your credit rating for years, or the struggle with high interest debt.  So, we are dedicating all our articles this month to helping young people in Canada avoid pitfalls of consumer credit.

 
Sign Here ...

If you are just heading out into the world, you are going to be tempted with a lot of contracts.  If you want to purchase a car, a cell phone plan, rent an apartment, get a gym membership, or acquire a credit card, you will have to sign for it.  Before you commit yourself, you need to beware a number of potentially dangerous mistakes.

 
Breaking The Contract

If you don’t make your payments, or try to end the contract early, there may be a penalty or consequence for not finishing your term.  Be careful what you commit yourself to.  For example, if you purchase a car on credit, and fail to make your payments, the finance company has the right to repossess your vehicle, auction or resell it, and then pursue you for the balance – this can mean you will likely owe a large balance, for a car you no longer have -- be careful!

 
Keep Your Paperwork!

You won’t know your rights if you don’t keep a copy of the contract!  Make sure you get a copy of anything you sign so you know what you have agreed to, and keep it somewhere safe.  You may need to hold the creditor to the terms they have agreed, and show them the terms they agreed to as well, even after the agreement runs out.

 
You Sign It, You Pay It

If you sign a contract, it doesn’t matter who uses the service, you are personally responsible.  This goes for car loans, cell phone contracts, apartment rentals – if you are going to use something with a roommate, boyfriend or girlfriend, brother or sister, everyone should sign for it.  That way, if something goes wrong, everyone is responsible, which means it’s less likely you will get stuck with “the check”.  This is called being “jointly and severally liable”, meaning everybody who signs owes the full amount owed until it is paid by someone.

 
Take Your Time

When you are handed a contract with tons of small print, you don’t have to feel rushed to sign it.  In fact, you can ask to take it home, read it over (maybe even show it to someone you trust), and come back the next day.  If you don’t read the contract, or you weren’t aware of what you agreed to, that won’t protect you when things go wrong.  Make sure you are comfortable with all the terms you are signing for.

 
Conclusion

No one should learn these lessons the hard way -- print this article out for yourself, or give it to your teenagers, your younger siblings, or someone you know who is struggling with their finances as they go out into the world as adults.  People have a right to know how to manage their finances, before they get in deep trouble.

If you want more information about financial literacy, the Financial Consumer Agency of Canada has more resources available for Financial Literacy Month here:


As well, if you are in the Cambridge/Kitchener-Waterloo/Guelph area and would like to attend a free credit workshop where we cover this topic and more, as a service to the community, you can find information here:


If you have any questions about contracts, or would like more information to help you learn about your finances, feel free to contact myself.  My direct line at Kingston Data and Credit is 226-444-5695.

Blair DeMarco-Wettlaufer
Kingston Data and Credit
Cambridge, Ontario
bwettlaufer@kingstondc.com