Lawmaker calls out car dealers who impose ‘installment mode’
Assistant Majority Leader Ernesto Dionisio Jr. (Photo from his Facebook page)
MANILA, Philippines — Assistant Majority Leader Ernesto Dionisio Jr. wants the House of Representatives to look into the supposedly unfair practice of car dealers of limiting buyers to installment payment modes, depriving consumers of the right of choice.
Dionisio, who represents Manila’s First District, has filed House Resolution No. 1058 urging the House Committee on Trade and Industry to conduct an inquiry on the alleged malpractice of car dealers of ignoring government-issued guidelines banning the imposition by sellers of “installment only” modes of payment.
He cited a provision of Department of Trade and Industry (DTI) Administrative Order 21-03, which states that “[n]o person or company engaged in the sale or offer for sale of consumer products and services shall impose an ‘installment only’ mode of payment to consumers.”
“Consumers shall be given the option to pay in cash, in installments, or a combination thereof. Denial of the right of the consumer to pay in cash shall constitute a prima facie violation of article 52 of the Consumer Act of the Philippines,” it added.
Against DTI guidelines
Dionisio noted that despite the clear guidelines set by the DTI, “the practice of automobile dealers of imposing mandatory bank or in-house financing on consumers persists, depriving the consumers of their right to choose their mode of payment.”
Article continues after this advertisementBank financing is when the payment for a car is advanced by the bank through a loan granted to the buyer, while in-house financing is offered by the automobile dealer that often comes with higher interest rates. While the bank financing approval could take days, in-house financing could be approved in a matter of hours.
Article continues after this advertisement“Automobile dealers also practice a ‘financing priority’ system, wherein consumers who opted for in-house financing are prioritized over those who opted for cash payment, which in itself, perpetuates an unfair sales practice in the industry,” the lawmaker said.
He stressed that these practices of automobile dealers “are clear contraventions of the consumers’ rights and thus, an investigation into these unfair practices is imperative.”
Not a rule
Sought for comment, Federation of Automotive Industries of the Philippines president Vicente Mills told the Inquirer that the determination on how to finance vehicle purchases should be left to the consumers.
“Actually, very few dealers do that—making it mandatory that financing should be through them. The customer usually has his choice which banks to go to,” Mills said in a phone interview.
“Maybe some dealers do that, but definitely it’s not a rule. Maybe some dealers do that but they cannot really force the customer,” he added.
However, Mills said that dealers, just like customers, also have the right when it comes to offering deals under their own terms.
George Barcelon, president of the Philippine Chamber of Commerce and Industry, is of the same view, saying that consumers should have this right to choose.
“It should be left to the consumer,” Barcelon told reporters on the sidelines of the business group’s general membership meeting in Makati, adding that the customer should be able to decide payment terms that would suit their capacity to pay.
